Seasonal business? Optimize your operating cycle
Cash flow fluctuations are intense for seasonal businesses. If your company defines itself as such, try to optimize your operating cycle. Look carefully at the beginning, middle and end of your cycle, identifying your strategic selling window. Try to stockpile cash received at cycle’s end, and then use those reserves to finance the next cycle. If you need a line of credit, compile a comprehensive loan package. Above all, draft a formal business plan, use financial projections and set budgets. Contact us for help with your distinctive challenges. READ MORE +
3 types of information your nonprofit’s board needs
Regularly supplying the right kind of information to your not-for-profit’s board of directors is the key to the board properly fulfilling its duties. You don’t want to deluge them with so much that they can’t keep up, but three types of information are important to share: 1) Financial, including your Form 990, audit results, and monthly and quarterly financial reports; 2) Strategic, such as program usage and membership statistics; and 3) Board member, including member bios and thank-yous for special efforts. Contact us to learn more about nonprofit governance. READ MORE +
Are income taxes taking a bite out of your trusts?
Are income taxes taking a bite out of your trusts? For trusts, the income threshold is very low for triggering the top income tax rate of 39.6%, top long-term capital gains rate of 20% and the 3.8% net investment income tax. The threshold is only $12,500 in 2017. But you can soften the blow by using an intentionally defective grantor trust, shifting nongrantor trust assets into tax-exempt or tax-deferred investments, or distributing trust income to beneficiaries in lower tax brackets. We can review your trusts and help find the best solution to achieve your goals. READ MORE +
2017 Q3 tax calendar: Key deadlines for businesses and other employers
Here are a few key tax-related deadlines for businesses and other employers during Quarter 3 of 2017. JULY 31: Report income tax withholding and FICA taxes for Q2 2017 (unless eligible for exception). File a 2016 calendar-year retirement plan report or request an extension. SEPT. 15: If calendar-year partnership or S corp. that filed an extension, file a 2016 income tax return. If calendar-year C corp., pay third installment of 2017 estimated income taxes. Contact us for more about the filing requirements and to ensure you’re meeting all applicable deadlines. READ MORE +
Pro forma compilations look at how an alternative course of action would have affected financials
Ever wonder how your company’s historical financial statements might differ if you’d taken an alternate course of action? For example, how much would earnings have increased (or decreased) if you’d merged with another business or discontinued a product line? New guidance went into effect on May 1, 2017, that clarifies what a pro forma compilation is and what’s expected from clients who hire CPAs to perform these nontraditional engagements. We understand the new guidance and have updated our practices. Contact us for help compiling your pro formas. READ MORE +
Is now the time for a charitable lead trust?
A charitable lead trust (CLT) is most effective in a low-interest-rate environment, so conditions for taking advantage of a CLT now are favorable. A CLT provides a regular income stream to charities during the trust term, after which the remaining assets pass to noncharitable beneficiaries. A charitable lead annuity trust (CLAT) makes annual payments to charity equal to a fixed dollar amount or a fixed percentage of the trust assets’ initial value. Typically, people establish CLATs during their lives because it allows them to lock in a favorable interest rate. READ MORE +
You don’t have to take business insurance costs sitting down
Insurance is a risk management imperative for businesses. But owners don’t have to take high coverage costs sitting down. Stay on top of facilities maintenance and constantly strive to improve worker safety. For example, have an electrician ensure circuits aren’t close to overloading, and regularly test all fire prevention systems. Check high-traffic areas for slip-and-fall risks and eliminate clutter. You might even want to request an OSHA courtesy inspection. We can assess your insurance costs and help you identify opportunities for savings. READ MORE +
Social impact bonds can fund nonprofit social services and offer other benefits
Traditionally, government agencies pay not-for-profit social service providers for specific activities or delivery models. But what if your nonprofit lacks the upfront money to pursue required outcomes? That’s where outside investors may come in. They supply capital and operating funds by investing in social impact bonds issued by your nonprofit or an intermediary. In exchange, they receive a share of government payments made for successful outcomes. Your nonprofit might benefit if it has measurable outcomes highly correlated with social net benefits. READ MORE +
Pay attention to the details when selling investments
If you don’t pay attention to the details, the tax consequences of selling an investment may be different from what you expect. For example, if you bought the same security at different times and prices and want to sell high-tax-basis shares to reduce gain or increase a loss to offset other gains, be sure to identify which block of shares is being sold. At year end, keep in mind that the trade date, not the settlement date, of publicly traded securities determines the year you recognize the gain or loss. Questions about tax planning for investments? Contact us! READ MORE +
Dot the “i’s” and cross the “t’s” on loans between your business and its owners
Treating transfers of money between a closely held business and its owners as loans can provide tax advantages. But the IRS looks closely at such transactions, so it’s critical to establish that the transaction is truly a loan by 1) executing a promissory note, 2) charging a reasonable rate of interest, 3) establishing and following a fixed repayment schedule, 4) securing the loan using appropriate collateral, 5) treating the transaction as a loan in the company’s books, and 6) making reasonable efforts to collect in case of default. Contact us for more details. READ MORE +
Timeliness counts in financial reporting
If you procrastinate closing your books and delivering year-end financial statements, lenders and investors may think the worst. Late financials give the impression that 1) you’re hiding weak performance, 2) management is inept or doesn’t care about financial reporting, or 3) you’re more likely to be a victim of fraud. Timely financial statements are a must for fostering goodwill with outside stakeholders. We can help you stay focused, work through complex reporting issues and communicate weaker-than-expected financial results in a positive, professional manner. READ MORE +
Videotaping your will signing may not produce the desired outcome
Some people make video recordings of their will signings in an effort to create evidence that they possess the requisite testamentary capacity. For some, this strategy may help stave off a will contest. However, unless the person signing the will delivers a flawless performance, a challenger will pounce on the slightest hesitation as “proof” that the person lacked testamentary capacity. An alternative strategy is to have a doctor examine you and attest to your capacity immediately before the signing. Contact us for other estate planning strategies. READ MORE +
Should your nonprofit take out a loan?
Debt is an integral part of many for-profit companies’ strategic plans, yet it has traditionally carried a stigma in the not-for-profit world. That view is changing, as more organizations borrow money for major capital purchases, new program funding and other reasons. But before your nonprofit borrows, know that it takes prudent financial management and reliable donor support to pay back a loan. You also need to make the case to a lender that you have a compelling reason to borrow and a realistic repayment plan. Contact us for more information. READ MORE +
Business owners: Put your successor in a position to succeed
Transitioning your company to a successor means becoming a mentor. As such, you’ll have to communicate clearly, be patient and know what you’re trying to accomplish. For starters, identify various ways to pass along your knowledge. Consider, for instance, a formal training program. Have your successor work in each business department or area. Also, encourage him or her to join trade associations and network with executives in your industry and others. Please contact our firm for more help maximizing the effectiveness of your succession plan. READ MORE +
Choosing the best way to reimburse employee travel expenses
Reimbursing employee travel expenses can provide tax benefits to both your business and the employee. Your business can deduct the reimbursements (subject to a 50% limit for meals and entertainment), and they’re excluded from the employee’s taxable income. But the expenses must be legitimate and the reimbursements must comply with IRS rules, generally by using either the per diem method or an accountable plan. Whether you have questions about which reimbursement option is right for your business or the additional rules and limits that apply to each, contact us. READ MORE +
Are your retirement savings secure from creditors?
A primary goal of estate planning is asset protection. If you have significant assets in IRAs and other retirement plans, it’s important to understand the extent to which those assets are protected against creditors’ claims. For example, the asset protection available for IRAs depends in part on whether the owner is involved in bankruptcy proceedings. In a bankruptcy context, creditor protection is governed by federal law: Both traditional and Roth IRAs are exempt from creditors’ claims up to an inflation-adjusted $1 million. Contact us for additional details. READ MORE +
5 tips for successful nonprofit succession
Every not-for-profit organization needs a comprehensive succession plan to ensure smooth leadership transitions. The plan should be in writing and cover such issues as developing employees to move up the ladder and eventually assume leadership positions. It’s also important to describe how you’ll leverage organizational knowledge and keep your nonprofit running smoothly during transition periods. Further, detail how your board can conduct or assist in the executive search process and support a new hire. Contact us for more information and help creating a plan. READ MORE +
A family bank professionalizes intrafamily lending
Intrafamily loans can provide your family financial assistance without triggering unwanted gift taxes, as long as they’re properly structured. A family bank is a family-owned, family-funded entity designed for the sole purpose of making intrafamily loans. By “professionalizing” family lending activities, a family bank can preserve the tax-saving power of intrafamily loans while minimizing negative consequences. Avoid family resentment by building a strong governance structure that promotes transparency. Contact us to learn more about intrafamily lending. READ MORE +
Could stronger governance benefit your business?
Every company has at least one owner, but not every company has strong governance. This is the set of rules and practices by which a business is directed and controlled. Strengthening it can help ensure productivity, reduce legal risks and ease ownership transitions. Begin by looking at your business structure. Corporations must take certain actions, but other entities can voluntarily take governance steps such as defining executive authority and formalizing compensation agreements. Please contact our firm for help with your company’s specific governance needs. READ MORE +
How nonprofit youth sports leagues can prevent fraud
Many not-for-profit youth sports leagues are at risk for fraud and don’t even know it. But you can protect your league by taking a few simple steps. The most important is to segregate duties. This means that no single individual receives, records and deposits funds coming in, pays bills and reconciles bank statements. Every payment (or at least those over a certain threshold) should require two signatures. And if your league has credit or debit cards, ask someone who isn’t an authorized user to review the statements. Contact us for more fraud prevention tips. READ MORE +
A “back door” Roth IRA can benefit higher-income taxpayers
Could you benefit from opening the “back door” to a Roth IRA? Roth IRAs allow tax-free distributions; the tradeoff is that contributions aren’t deductible. But income-based phaseouts may reduce or eliminate your ability to contribute. If so and you don’t already have a traditional IRA, a “back door” Roth IRA might be for you: You set up a traditional IRA, make nondeductible contributions to it and convert it to a Roth. The only tax due will be on any growth in the account between the time you made the contribution and the conversion date. Contact us for details. READ MORE +
Business owners: When it comes to IRS audits, be prepared
As a business owner, you likely are concerned about being audited by the IRS. Audits can occur randomly, but some tax return items may raise red flags with the IRS, such as major inconsistencies between previous years’ filings and the most current one, profit margins or expenses markedly different from those of similar businesses, and unusually high deductions. If the IRS selects you for an audit, we can help you understand what the IRS is disputing, gather the needed documents and information, and respond to the auditor’s inquiries expediently and effectively. READ MORE +
Best Practices for Managing Nonprofit Finances
Cooper Union is a NYC-based private college that was founded in 1859 with a mission to be “open and free to all.” For over 150 years the school relied on its significant endowment to provide a tuition-free education to its students. READ MORE +
Real estate investor vs. professional: Why it matters
Income and losses from investment real estate or rental property are passive by definition, unless you’re a real estate professional. Why does this matter? Passive income may be subject to the 3.8% net investment income tax, and passive losses generally are deductible only against passive income, with the excess carried forward. To qualify as a pro, you must annually perform: 1) more than 50% of your personal services in real property trades or businesses in which you materially participate, and 2) more than 750 hours in these businesses. Contact us for details. READ MORE +
Hire your children to save taxes for your business and your family
Own a business? Have children who are teens, college students or new grads? If you hire them this summer, not only can they benefit but you can enjoy tax savings, too. By shifting some business income to a child as wages for services performed by him or her, you can turn high-taxed income into tax-free or low-taxed income. For your business to deduct the wages, the work done must be legitimate and the wages must be reasonable. Depending on your business’s structure, you might enjoy employment tax savings, too. Additional rules apply; contact us for details. READ MORE +
Prepaid funeral plans may not provide peace of mind
The typical funeral now costs $8,000 to $10,000. To relieve their families of the burden of planning a funeral, many people plan their own and pay for them in advance. Unfortunately, prepaid funeral plans are fraught with potential traps. Before you agree to a prepaid plan, the Federal Trade Commission recommends asking what happens to the money you’ve prepaid, what happens to the interest income on prepayments placed in a trust account and whether you’re protected if the funeral provider goes out of business. Contact us for other ideas on funding funeral costs. READ MORE +
Want to help your child (or grandchild) buy a home? Don’t wait!
Want to help your child (or grandchild) buy a home? Don’t wait! Mortgage interest rates are still quite low, but they likely will increase as the Fed continues to raise rates. If the child is eligible for the 0% long-term capital gains rate, here’s a tax-smart strategy: Instead of giving cash to help fund a down payment, give long-term appreciated assets such as stock or mutual fund shares. The child can sell the assets tax-free, and you can save the taxes you’d owe if you sold the assets yourself. Contact us for other tax-smart ways to help a child buy a home. READ MORE +
Does your nonprofit’s board understand its fiduciary duties?
Lawmakers’ and public interest in not-for-profits’ governance has grown in recent years. If your board hasn’t reviewed its fiduciary duties recently, it should do so. In general, a fiduciary has three primary duties: 1) care (to oversee financial and operational activities with care), 2) loyalty (to act in the nonprofit’s best interests) and 3) obedience (to adhere to the nonprofit’s bylaws and rules and all applicable laws). Board members who violate these duties may be held personally liable for financial harm suffered by your nonprofit. Contact us for details. READ MORE +
3 hot spots to look for your successor
Picking someone to lead your company after you is a daunting task. Keep an open mind and assume nothing. For example, a family member may seem the obvious choice. But he or she must really want the job and be qualified. Maybe a current employee is the better choice, but start grooming him or her early and monitor readiness carefully. Alternatively, you might need to find an external candidate. To do so, consider networking, targeted ads and even an executive search firm. Overwhelmed? Don’t be; we can help you create an effective succession plan. READ MORE +
Use pro formas to plot your route to success
If running a business is like going on a road trip, then a full set of pro forma financials is your road map or GPS app. Projected balance sheets, income statements and cash flow statements tell investors and lenders 1) where you are, 2) where you want to go, 3) when you’re likely to experience cash flow or capacity shortages, and 4) when you hope to arrive. Moreover, the statement of assumptions explains how you’ll achieve your goals. We can help you prepare pro forma financials, compare expected to actual results and adjust your assumptions as needed. READ MORE +
Asset valuations and your estate plan go hand in hand
If you’re making noncash gifts in trust or outright to beneficiaries, know the values of those gifts and disclose them to the IRS on a gift tax return. For substantial gifts of noncash assets other than marketable securities, have a qualified appraiser value the gifts at the time of the transfer. This is critical because, if the IRS deems your valuation to be “insufficient,” it can revalue the property and assess additional taxes. If the IRS finds that the property’s value was “substantially” or “grossly” misstated, it will also assess additional penalties. READ MORE +
Get more from your association’s program budget
Is your not-for-profit association offering enough (or the right) programs to keep members active and engaged? New programs require time, effort and money, so when you commit to developing one you want to get the biggest bang for your buck. Start by gathering information through focus groups, surveys and informal conversations about issues your membership is facing. Note gaps between your current program offerings and members’ wants and needs. Don’t spin member feedback to match what you think your organization needs. Contact us for more tips. READ MORE +
Enhance benefits’ perceived value with strong communication
If employees don’t value their benefits, they might not fully use them. And, for the employer, this could mean wasted dollars spent on a strong but unappreciated benefits package, plus the possible loss of good employees who depart for “better” benefits. To boost perceived value, create a year-round communication program to promote your benefits package. Consider targeting various life stages to better appeal to employees. And gather feedback to determine employees’ informational needs. Contact our firm for more tips on maximizing the value of your benefits. READ MORE +
Now’s a great time to purge old tax records
Do you know what individual income tax records are safe to toss? You need to hold on to your 2016 records for now, but it’s a great time to see what records for previous tax years you can purge. At minimum, keep records for as long as the IRS can audit your return or assess additional taxes, generally three years after filing. So you may be able to shred and toss (or electronically purge) most records related to returns for 2013 and earlier. But hang on to certain records longer, such as tax returns themselves, W-2 forms and real estate or investment records. READ MORE +
Do you know the tax implications of your C corp.’s buy-sell agreement?
Will your C corp.’s buy-sell agreement produce adverse tax consequences? In a redemption (the company buys back a departing owner’s shares), share value may rise without boosting owners’ basis, increasing tax if shares are later sold. In a cross-purchase (owners buy back the shares), basis increases. But if owners are required to buy back shares and the company buys them instead, it may be a taxable dividend. A hybrid agreement naming the company as a party to the transaction and allowing but not requiring owners to buy back shares may be the answer. We can help. READ MORE +
Life insurance and an estate plan may not always mix well
Tax efficiently mixing life insurance into your estate plan can be challenging. If you own an insurance policy on your life, you can remove the proceeds from your taxable estate by transferring it to a family member or an irrevocable life insurance trust. But if you don’t survive for at least three years, the proceeds will be pulled back into your estate, possibly triggering estate taxes. The recipe for success? Transfer the policy as part of a “bona fide sale for adequate consideration” to an irrevocable grantor trust. Contact us to learn more. READ MORE +
Individual tax calendar: Key deadlines for the remainder of 2017
Here are a few key tax-related deadlines for individuals through the rest of 2017. JUNE 15: Pay second installment of 2017 estimated taxes, if applicable. SEPT. 15: Pay third installment of 2017 estimated taxes, if applicable. OCT. 16: File a 2016 income tax return and pay any tax, interest and penalties due, if an automatic six-month extension was filed. DEC. 31: Incur various expenses that potentially can be deducted on your 2017 tax return. Contact us for more information about the filing requirements and to ensure you’re meeting all applicable deadlines. READ MORE +
Navigating the New Markets Tax Credit Program
There is a government sponsored program that helps investors do well by doing good; that is earn tax credits for investing in low-income communities across America. But this opportunity comes with a catch: the need to navigate a complex series of tax filing, compliance and investment qualification requirements. The New Markets Tax Credit Program's goal is to spark revitalization of low-income and overwise impoverished areas in the United States. READ MORE +
Look at your employees with cybersecurity in mind
No business should rely on luck to avoid a cyberattack. One area to consider is your employees. You might assume that only an outsider would, say, steal sensitive data or disable your website. But these crimes are often inadvertently caused or intentionally committed by employees. Train managers to review job applications with cybersecurity in mind. Also, clearly state your cybersecurity policies in your employment handbook, so all employees know your guard is up. Although most workers are honest, all it takes is one mistake or bad apple to cause a disaster. READ MORE +
5 accounting mistakes your nonprofit should avoid
To err is human, but your not-for-profit’s supporters, not to mention the IRS, may be less than forgiving about financial and bookkeeping mistakes. So attend to accounting details to avoid pitfalls. For example, don’t operate without proper accounting procedures that cover all aspects of managing your organization’s money, from how to accept, document and deposit donations to how to pay bills. And don’t work without a budget. You can’t control overspending or invest a surplus if you don’t know they exist. For more tips on avoiding accounting mistakes, contact us READ MORE +
A timely postmark on your tax return may not be enough to avoid late-filing penalties
The 2016 tax return filing deadline for individuals is April 18, and the IRS considers a paper return to be timely filed if postmarked by midnight. If you owe tax, dropping your return, along with a check for the tax due, in a mailbox on the 18th may not be sufficient. If the envelope gets lost, you could be hit with failure-to-file and failure-to-pay penalties. To avoid this risk, use certified or registered mail or one of the private delivery services designated by the IRS. (See IRS.gov for a list.) Let us know if you have questions about the rules. READ MORE +
What are the most tax-advantaged ways to reimburse employees’ education expenses?
What are the most tax-advantaged ways to reimburse employees’ education expenses? One option is the working condition fringe benefit. It allows you to exclude reimbursements of job-related education costs from employees’ wages. This means employees don’t have to pay tax on them and you don’t have to withhold income tax or withhold or pay payroll taxes on them. Another option is an educational assistance program, which allows the same tax treatment but can also cover reimbursements for non-job-related education up to $5,250 annually. Contact us to learn more. READ MORE +
Create a strong system of checks and balances
How do you rate your internal controls? A strong system of internal controls will help a company achieve its strategic and financial goals, in addition to minimizing the risk of fraud. Auditors routinely monitor the three basic control features: 1) physical restrictions, 2) account reconciliation, and 3) job descriptions. Company insiders sometimes lack the experience or objectivity to assess internal controls. But our auditors have seen the best (and worst) internal control systems and can help evaluate whether yours is effective. READ MORE +
Be aware of the ins and outs of holding joint title to property
Owning assets jointly with children or other heirs is a common estate planning “shortcut.” There are two potential advantages to joint ownership: convenience and probate avoidance. But, it can also create a number of problems, such as unnecessary taxes. Adding a child’s name to the title may be considered an immediate taxable gift of one-half of the property’s value. And when you die, the property’s value then will be included in your taxable estate, though any gift tax paid with the original transfer would be allowed as an offset. Contact us for other drawbacks. READ MORE +
Saving tax with home-related deductions and exclusions
Home ownership comes with many tax-saving opportunities to consider when filing your 2016 return or tax planning for 2017, such as property tax, mortgage interest, home-equity-debt interest and home office deductions and rental income and home-sale gain exclusions. A mortgage-insurance premium deduction and debt forgiveness exclusion expired December 31, 2016. Elimination of more breaks, such as the property tax deduction, has been proposed. Whether such changes will be signed into law and with what effective dates is uncertain. Contact us for more information. READ MORE +
A refresher on tax-related ACA provisions affecting businesses
Now that the Affordable Care Act (ACA) repeal and replace bill has been withdrawn, it’s a good time to review a few tax-related ACA provisions affecting businesses: 1) Qualifying small employers can claim a credit for a portion of health insurance premiums. 2) Applicable large employers not offering full-time employees health coverage that meets certain standards risk penalties. 3) Employers must withhold an additional 0.9% Medicare tax once an employee’s pay for the year exceeds $200,000. Have questions about the ACA’s tax impact on your business? Contact us! READ MORE +
Financial Basics for a Nonprofit's Board
Many people consider a position on a nonprofit board a recognition of their financial contributions and other efforts to support the organization. But it goes well beyond that. One of the main fiduciary responsibilities of a board member is helping oversee the financial health and accountability of their organization. READ MORE +
3 financial statements you should know
What are the three financial statements under U.S. GAAP, and what’s included in each? If you can’t immediately answer these questions, you’re not alone. Many business owners are so focused on building revenue that they don’t have time to regularly monitor the 1) income statement, 2) balance sheet and 3) cash flow statement. But doing so can provide insight into trends that may help you catch potential problems early, and pivot, when needed, to maximize the company’s value. Contact us for a refresher on financial reporting and how to benchmark performance. READ MORE +
Will your favorite charity accept your donation?
If your estate plan includes charitable donations, be sure to discuss any planned gifts with the intended recipients. Some charities have policies of rejecting gifts that come with strings attached; they accept only unrestricted gifts. Others may not accept certain types of assets, such as real estate. If a charity rejects your gift, the property will go to any contingent beneficiaries. If these beneficiaries aren’t other charities, rejection of the gift may create estate tax liability. Contact us to learn about additional pitfalls when making gifts to charity. READ MORE +
Consider key person insurance as a succession plan safeguard
For many companies, the sudden death of an owner or hard-to-replace employee could spell doom for the business itself. Key person insurance guards against this risk. Your business pays the premiums and, if the insured dies while the policy is in effect, receives the payout. Premiums generally aren’t tax deductible, but death benefits typically aren’t considered taxable income when received. Not every type of business needs this insurance, but it can provide security while you develop a succession plan. We can help you decide whether a key person policy is for you. READ MORE +
Victims of a disaster, fire or theft may be able to claim a casualty loss deduction
If you suffered damage to your home or personal property last year, you may be able to deduct these “casualty” losses on your 2016 federal income tax return. A casualty is a sudden, unexpected or unusual event, such as a natural disaster, fire, accident, theft or vandalism. The loss is generally the lesser of the amount you paid for the property or the decrease in the property’s fair market value. This amount must be reduced by any insurance or other reimbursement received or anticipated. Additional rules and limits apply. Contact us for more information. READ MORE +
Direct tuition payments benefit your grandchild and your estate plan
Grandparents often want to help finance their grandchildren’s education. A simple technique is to make tuition payments on behalf of your grandchild. So long as you make the payments directly to the educational institution, they avoid gift and generation-skipping transfer (GST) taxes without using up any of your $5.49 million gift or GST tax exemption or $14,000 annual exclusion. Even if these taxes are repealed, as long as education funding is your goal, this strategy likely won’t have any negative impact. Contact us to learn about all of your funding options. READ MORE +
Offer plan loans? Be sure to set a reasonable interest rate
Can your company’s retirement plan participants take out loans from their accounts? If so, you must set a “reasonable” interest rate. Neither the IRS nor the DOL provides a set percentage for plan sponsors. The IRS looks to similar local interest rates and what local banks charge for similarly structured loans. Meanwhile, DOL regulations generally define a reasonable rate as equal to commercial lending interest rates under similar circumstances. Need help? We can assist you in reviewing your plan document and loan policy statement to calculate a reasonable rate. READ MORE +
Nonprofits and their staffers can save tax with an accountable plan
When your nonprofit’s employees submit expenses for reimbursement, you generally must report the payments on W-2 forms, withhold applicable taxes and pay the employer portion of employment taxes. But with an accountable plan in place, you can avoid these steps and save both staffers and your organization taxes. Expenses covered in an accountable plan must have a business connection, be “reasonable” and be properly documented. Additional rules apply, and your plan should be put in writing in case the IRS ever challenges it. We can help you do this. READ MORE +
Who can — and who should — take the American Opportunity credit?
Who can take the American Opportunity credit? If you have a child in college, you may be eligible to claim the credit (up to $2,500) on your 2016 income tax return. If your income is too high, you won’t qualify. But your child might. There’s a potential downside: You’ll have to forgo your dependency exemption for him or her. And the child can’t take the exemption. But the exemption is also subject to a phaseout, so you might lose its benefit anyway. We can help run the numbers and provide more information about qualifying for the American Opportunity credit. READ MORE +
Make sure the IRS won’t consider your business to be a “hobby”
If you run a business “on the side” and derive most of your income from another source, you may face a risk: Your enterprise might be a hobby in the eyes of the IRS. If so, it will be subject to the hobby loss rules, which means you can’t use a loss from the activity to offset other income. In evaluating whether an activity is a hobby, the IRS looks at various factors. For example, poor record keeping, ongoing lack of profit and minimal effort to make a profit might indicate a hobby. Concerned about the hobby loss rules? We can help evaluate your situation. READ MORE +
Getting your money’s worth out of a company retreat
Company retreats can be expensive. But when planned properly, they can produce fresh strategic ideas and raise employee morale. To ensure the event’s success, several months ahead of time identify your key retreat objectives. Pick only two or three so you have a better chance of fulfilling these goals. Also, create a detailed, reasonable budget. Set limits for such variable costs as location, accommodations, food, transportation, speakers and entertainment. It’s not easy, but a retreat can be both enjoyable and cost-effective. Please let us know how we can help. READ MORE +
Divorce necessitates an estate plan review
Going through a divorce? Update your estate plan as soon as possible to avoid unintended outcomes. Unless you wish to provide your former spouse with an inheritance, immediately amend your will and trusts to eliminate him or her as a beneficiary. Also, unless you’re comfortable with your former spouse controlling your wealth, designate someone else as executor or trustee. This is a good idea even if you live in a state where divorce automatically nullifies bequests to an ex-spouse and automatically revokes an appointment of a former spouse as executor or trustee. READ MORE +
Why nonprofits need continuity plans
All organizations, not-for-profit and for-profit alike, need a continuity plan for when disaster strikes. But these plans are particularly critical for organizations that provide essential human and emergency services. Start by assessing threats to your people, processes and technology. Then consider best and worst outcomes regarding personal injury, property damage and financial losses and how you can mitigate any damage. Although everyone should provide feedback, assign one person to take the lead and create the plan document. For additional tips, contact us. READ MORE +
2016 IRA contributions — it’s not too late!
There’s still time to make 2016 IRA contributions: The deadline is April 18. If the contribution is deductible, it will lower your 2016 tax bill. But even if it isn’t, a 2016 contribution is likely a good idea. Your money can grow tax-deferred (tax-free in Roth accounts). But annual contributions are limited by law, and any unused limit can’t be carried forward; once the deadline has passed, the savings opportunity is lost forever. The 2016 limit is $5,500 (plus $1,000 for those age 50 or older on Dec. 31, 2016). Want to learn more? Contact us. READ MORE +
The Section 1031 exchange: Why it’s such a great tax planning tool
Like many business owners, you might also own highly appreciated business real estate. Under a Sec. 1031 “like-kind” exchange, you can defer gains on real property used in a business if, instead of selling it, you exchange it solely for property of a “like kind.” Virtually any type of real estate will qualify as long as it’s business or investment property. It’s rare for two owners to simply swap properties. You’ll likely have to execute a “deferred” exchange, in which you engage a qualified intermediary. The rules are complex, so contact us for details. READ MORE +
Keep family matters out of the public eye by avoiding probate
Probate is a legal procedure in which a court establishes your will’s validity, determines your estate’s value, resolves creditors’ claims, provides for the payment of taxes and transfers assets to your heirs. Downsides to probate are that it’s time consuming, expensive and public. You can avoid or minimize probate by designating beneficiaries where possible and titling assets in a way that allows them to be transferred directly to your beneficiaries outside your will. Contact us to learn more ways to minimize probate based on your assets. READ MORE +
Listen and trust: The power of collaborative management
Do you collaborate with your managers or simply issue orders? As your company grows, you’ll likely be better off sharing responsibility for major decisions. To promote collaboration, clearly communicate your strategic objectives. Also, listen to your managers’ ideas and act on the viable ones. Conduct regular performance reviews as well, emphasizing accomplishments and exploring growth opportunities. Provide constructive, ongoing professional and leadership training, too. Let our firm assist you in assessing the profitability impact of your management team. READ MORE +
Does your nonprofit need to register in multiple states?
If your not-for-profit solicits funds online, or uses other fundraising methods that cross state boundaries, it may need to register in multiple jurisdictions. The critical activity is soliciting, not accepting, funds. So an unsolicited donation from an out-of-state supporter doesn’t necessarily require you to register in that state. However, widely used communications such as email and text blasts and social media appeals are likely to be considered multistate solicitations. Unfortunately, rules vary widely by state and can be confusing. Contact us for help. READ MORE +
When an elderly parent might qualify as your dependent
Are you supporting an elderly parent? You might qualify for the adult-dependent exemption, which allows a deduction of up to $4,050 per adult dependent claimed on your 2016 tax return. For you to qualify, in most cases your parent must have less gross income for the tax year than the exemption amount. Generally Social Security is excluded, but payments from dividends, interest and retirement plans are included. And you must have contributed more than 50% of your parent’s financial support. Contact us for more information on qualifying for this break or others. READ MORE +
Filing deadline rapidly approaching for flow-through entities
The March 15 federal income tax filing deadline for calendar-year partnerships, S corporations and LLCs treated as partnerships or S corporations for tax purposes is nearly upon us. This deadline is nothing new for S corporation returns, but it’s about a month earlier than previous years for partnership returns. The extension deadline remains at Sept. 15 for both partnership and S corporation returns, but you must file for the extension by March 15. Contact us if you have questions about the filing deadlines that apply to you or avoiding interest and penalties. READ MORE +
Cooking the books
What’s the most costly type of white collar crime? Falsified or manipulated financial statements generate a median cost of $975,000 — more than any other type of occupational fraud, according to the Association of Certified Fraud Examiners. Examples include concealed liabilities, fictitious revenues, inflated asset valuations, misleading disclosures and timing differences. Losses from financial statement fraud can quickly snowball out of control. We can help identify red flags, ferret out ongoing schemes and deter would-be fraudsters from cooking your books. READ MORE +
Make health care decisions while you’re healthy
Estate planning isn’t just about what happens to your assets after you die. It’s also about protecting yourself and your loved ones. This includes having a plan for making critical medical decisions in the event you’re unable to make them yourself. And, as with other aspects of your estate plan, the time to act is now, while you’re healthy. If an illness or injury renders you unconscious or otherwise incapacitated, it will be too late. READ MORE +
Don’t make hunches — crunch the numbers
It’s a simple question. If my company buys a given asset, will the asset’s benefits be greater than its cost? Some basic ways of finding an answer ignore the time value of money. That’s why it’s better to look to discounted cash flow metrics. For example, net present value measures how much value a capital investment adds to the business. And internal rate of return estimates a single rate of return that summarizes the investment opportunity. We can help you use these and other metrics to make better business decisions. READ MORE +
Should your nonprofit outsource HR management?
Does your not-for-profit have too much work and not enough staff to go around? Consider outsourcing your human resources function. It could give your employees more time to spend on other core duties, mission-driven programs and strategic plans and help reduce costs. Even if after performing a cost-benefit analysis you find that it costs more to outsource, you may want to move forward because most HR providers will have better tools and more time to spend on employee issues than your organization does. But there are downsides, too. READ MORE +
When it comes to charitable deductions, all donations aren’t created equal
As you file your 2016 income tax return and plan your charitable giving for 2017, it’s important to keep in mind the available deduction. It can vary significantly depending on a variety of factors. Other than the actual amount you donate, one of the biggest factors that can affect your deduction is what you give. READ MORE +
Deduct all of the mileage you’re entitled to — but not more
Rather than keeping track of the actual cost of operating a vehicle, employees and self-employed taxpayers can use a standard mileage rate to compute their deduction related to using a vehicle for business. But you might also be able to deduct miles driven for other purposes, including medical, moving and charitable purposes. READ MORE +
Can the WOTC save tax for your business?
Employers that hire individuals who are members of a “target group” may be eligible for the Work Opportunity tax credit (WOTC). If you made qualifying hires in 2016 and obtained proper certification, you can claim the WOTC on your 2016 tax return. Whether or not you’re eligible for 2016, keep the WOTC in mind in your 2017 hiring, because the credit is also available for 2017. READ MORE +
Use an ILIT as a wealth preserver
If you’re concerned about your family’s financial well-being after you’re gone, life insurance can provide peace of mind. Going a step further and setting up an irrevocable life insurance trust (ILIT) to hold the policy offers additional estate planning benefits.Nevertheless, you can design the trust to adapt to changing circumstances and provide that children or grandchildren born after you establish the trust be automatically added as beneficiaries. READ MORE +
What can a valuation expert do for your succession plan?
Most business owners spend a lifetime building their business. And when it comes to succession, they face the difficult decision of whether to sell, dissolve or transfer the business to family members (or a nonfamily successor). Many complicated issues are involved, including how to divvy up business interests, allocate value and tackle complex tax issues. READ MORE +
Make sure your nonprofit’s bylaws are on point
Bylaws are the rules and principles that define your not-for-profit’s governing structure. Your board and staff need to be familiar with exactly what the bylaws contain — and what they don’t. If they’re incomplete or don’t reflect the organization’s current mission, revising them is critical. READ MORE +
IFRS vs. GAAP: Some public companies want a choice
U.S. public companies are required to report their financial results using U.S. Generally Accepted Accounting Principles (GAAP). But, since 2007, hundreds of foreign companies listed on U.S. stock markets have been able to report financial results using International Financial Reporting Standards (IFRS) instead of GAAP. The Securities and Exchange Commission (SEC) is currently considering a proposal that, if approved, would allow domestic companies to supplement their GAAP results with IFRS results. READ MORE +
Transfer Pricing and Micro-Multinationals
There is a growing phenomenon in business called “micro-multinationals” and a vexing international tax issue around “transfer pricing” that goes with them. The Marks Paneth global network is a multi-lingual and multi-disciplinary team of experienced professionals who can work with you to get started by designing an efficient transfer pricing model and pricing methodology that aligns with your business. READ MORE +
What your nonprofit can learn from for-profit businesses
If your not-for-profit is “stuck” and unsure how to move forward, consider adopting some for-profit business practices. The essential missions of businesses and nonprofits may be different, but ways to achieve them often are the same. For example, the strategic plan lies at the core of most for-profit businesses and should be at the core of nonprofits, too. Your plan should set objectives for one, five and 10 years out, paying particular attention to each goal’s return on investment. To learn more about business practices that benefit nonprofits, contact us. READ MORE +
Envision your advisory board before you form it
Many companies reach a point where they could benefit from an advisory board. If you’re about there, you may wonder what your ideal advisory board should look like. First, participants need to have expertise and experience that complement your company’s staff. Second, they should support your long-term strategic goals. Look to assemble a diverse mix of backgrounds, personalities and skills. As your business evolves, you may need to replace some members or change the board’s size. Please contact our firm to discuss the concept of advisory boards further. READ MORE +
Give your board members a break — and your nonprofit a boost
A board retreat can give board members a break and your nonprofit a boost. Board members lead busy lives and may not get to every board meeting, so a retreat that brings everyone together in a relaxed setting can be invaluable. Retreats enable participants to get past the mundane topics of regular meetings and delve into specific issues. To get the most out of your retreat, choose the time and place carefully, create a detailed agenda and make a postretreat plan for following up on decisions made during the retreat. Contact us for help with nonprofit governance. READ MORE +
Put Email List Segmentation to Work for Your Nonprofit
If you send all of your not-for-profit’s communications (donation requests, newsletters, meeting announcements) to everyone on your email list, don’t be surprised if stakeholders tune out or even unsubscribe. By getting the right messages to the right people, email segmentation can help increase engagement and response rates. Consider segmenting your list by donation amount, event participation, membership renewal, volunteer hours and even demographics, if you have that data. Contact us for more tips on improving your nonprofit’s efficiency and effectiveness. READ MORE +
Is your business committed to its cost-control regimen?
Is your business truly committed to its cost-control regimen? Like keeping up an exercise routine, controlling expenses takes not just good intentions but also an ongoing effort. Begin by identifying expenses in every business area. Prime candidates include technology contracts, lease agreements, and utilities and office supplies. Managing such costs shouldn’t be a one-time thing. It must be a strategic decision that starts with ownership and is clearly communicated down the organizational chart. Contact our firm for help with your long-term cost-control plan. READ MORE +
PTO banks: A smart HR solution for many companies
Many businesses are taking a new approach to paid time off (PTO). Under the “PTO bank” concept, employers merge the traditional components of excused absences (vacation time, sick time, etc.) into one employee-managed account. Many of today’s employees and job candidates view PTO banks as easier and empowering. More efficient administration can reduce the associated costs for employers as well. But, despite the many potential benefits, creating PTO banks may not be the best move for every company. Please contact our firm for help assessing the idea. READ MORE +
Are you ready for the new revenue recognition rules?
While the FASB has postponed the effective date for the new principles-based, revenue guidance by one year, companies that report comparative results can’t delay any longer. Learn how to start the implementation process now. READ MORE +
Using independent contractors? Protect your business with these tips
Many businesses use independent contractors to keep payroll taxes and fringe benefit costs down. But using outside workers may result in other problems. The IRS often questions businesses about whether workers should be classified as employees or independent contractors for federal employment tax purposes. READ MORE +
Time for a nonprofit internal controls check-up
Your nonprofit’s internal controls are strong only if they’re current. So perform a risk assessment every time you experience major organizational changes, such as significant expansion, or when factors such as the loss of a large grant put new stresses on your not-for-profit. Two functions deserve particular scrutiny. READ MORE +
An effective succession plan calls for decisive action
The prospect of leaving your company in the hands of someone else likely brings mixed emotions. You’ve no doubt spent a substantial amount of time and a great degree of effort in getting your enterprise to where it is today. But when it comes to creating and executing a succession plan, decisive action is critical. You’ve got to respect the importance of timeliness — not only for you and your family, but also for your successor and employees. So here are two key questions to answer. READ MORE +
Entrepreneurs Coming to the US. What you don’t know about taxes can really hurt you!
Business opportunities in the US marketplace have never been better for non-US based entrepreneurs and start-ups. The US economy continues to show strong growth and economic resilience, even in the face of volatile capital markets in early 2016. But both foreign individuals and start-ups need to be wary of the complex US tax landscape, as poor planning and even inadvertent behavior or actions can result in huge tax liabilities. READ MORE +
The Benefits of 401(k) Plans for Startups.
While many small business owners may consider offering a 401(k) plan, many decide against it based on uncertainty over costs, a cumbersome set-up process and the administrative burden that is required to run it. READ MORE +
The Often Complicated Tax Implications of Stock Options
Employee Stock Options are fast becoming a standard component of compensation for many emerging growth sector companies. Stock option plans are a very popular way of attracting and retaining high performing employees for startups, who often lack the cash to offer big salaries and bonuses. These plans give founders the ability to offer stock options to employees, officers, directors, consultants and advisors – in short all the people often needed to get a business up and running. It allows people to buy stock in the company when they exercise the options, and in some cases make loads of money in the process. READ MORE +
Avoiding the US Sales Tax Trap
UK and European companies that do business in the US or set up US operations are frequently puzzled by US sales and use taxes. Sales and use taxes are transactions taxes that are imposed on ultimate customers at a state and local level. The amounts and rules vary from state to state and locality to locality. Sales and use taxes are not like European value added tax (VAT). VAT is a tax imposed on each level of a transactional chain but then recoverable in many circumstances except by the ultimate retail customer. READ MORE +
NJ Angel Investor Tax Credit Program
The New Jersey Economic Development Authority (NJEDA) is offering all investors who invest in a qualifying NJ emerging technology business a tax credit through the Angel Investor Tax Credit program. NJEDAThis program was enacted in January of 2013 to help attract investments, and spur job creation / economic growth in New Jersey’s current and next generation of high-skilled, high- paying emerging technology sector. READ MORE +
Can Your Company Cash in on the Modified R&D Tax Credit?
The IRS section 41 tax credit for research and development (R&D) is now permanent. With this change there are big potential benefits to start-ups and small business who could not previously take advantage of this credit. If you are a start-up company with annual gross receipts of less than $5 million, you can apply up to $250,000 of your R&D credit against your payroll tax liability. The modification of the R&D tax credit was part of the 2015 PATH (Protecting Americans from Tax Hikes) act and allows companies to free up cash flow to invest in their businesses. READ MORE +
Tax Considerations for Start-Ups (Part 2)
In the excitement of raising money from investors then launching, a new start-up business ,many founders and stakeholders are focused on refining the product / service offering, acquiring customers, making sales and making the business profitable. But founders should be both mindful and vigilant about meeting all their tax liabilities. Not doing so could result in extremely unpleasant consequences, including stiff fines from federal, state and local tax authorities. Here’s an overview of the business owner’s role / responsibility, and a list of tax-related issues that should be considered by savvy founders, ideally with the help of a qualified CPA. READ MORE +
Making UK Equity Plans Work for US Employees.
When UK emerging companies venture outside the UK, they quickly need to address whether – and how – to extend equity-based compensation to non-UK employees. However, few jurisdictions offer a regime as favourable as the UK’s Enterprise Management Incentives (EMI) scheme for providing equity compensation to emerging company employees. READ MORE +
Are You Thinking of Doing Business in the US?
For many individuals, entrepreneurs and companies it’s about achieving and living the ‘American dream’. Being successful in the US is well on the way to being successful globally. To what extent is this true, and how easy is it to ‘crack’ America? READ MORE +
Bet Early. Win Big. Tax Plan Accordingly.
There is an abundance of digital media coverage, and discussions at leading venture funding events about the huge opportunities for investors and founders alike to win big financially – by creating and scaling innovative start-ups. READ MORE +
Transfer Pricing is Good.
You are a non-US based firm and you’ve taken the plunge by deciding to set up your business in the US. Now you are designing your business model and your budget for the next few years. High on your “to do” list is estimating sales revenue, marketing, wages and office space and other expenses so that you can determine the potential profitability or loss of your business globally. The difficult task is then to determine how much of this profit or loss is taxed in each country where you are operating. READ MORE +
Businesses Coming to the US. What you don’t know can cost your company plenty!
Start-ups coming to the US from abroad, even if just to “test the waters” of doing business in the US, need to be wary of the complex US tax landscape – on a Federal and State level. Poor planning or lack of understanding of the laws, may cause an unsuspecting Start-up to cross the line and actually “start to do business” in the US. Then, failure to take simple actions like filing tax returns (even without profits) or collecting sales tax can result in huge tax liabilities! READ MORE +
Corporate Structuring is Good
US venture capitalists historically insisted that they would only invest in an early-stage UK or other non-US company if the company “flipped” its corporate structure and installed a US (typically Delaware) holding company above the startup’s existing top company. For a variety of reasons this historical view is changing. Many US investors increasingly are open to the idea of investing in UK (and often Irish) holding companies without the “Delaware flip.” READ MORE +
Year End Tax Planning Tips for Emerging Growth Companies
During the holidays you often hear the saying “It is better to give than to receive” but we don’t think this should apply to having your company make unnecessary tax payments to the IRS, state or local tax authorities. Many emerging growth companies don’t have revenue in their first year or two of operations as they create a viable product, solicit customers and work to raise money from angels and venture capital firms. READ MORE +
Take Advantage of Tax Incentives to Enhance Your ROI.
Small businesses have been the growth engine of the US economy since the last recession. Congress has helped fuel that engine with provisions in the IRS tax code that can reward people who start and invest in certain types of small businesses. The exemption for Qualified Small Business Stock (QSBS) is an often overlooked, but potentially big tax break for both founders and those investing in small businesses. READ MORE +
Can Founders Really Scale…or Not?
Back in May of 2014 Forbes’ Entrepreneurs Blog addressed an interesting question: “Founders Can’t Scale: Fact or Fiction?” Forbes opened this article with the statement “There is a belief in the business world that founders can’t scale. Put another way, a company’s growth curve will eventually outstrip the capabilities of its founder’s ability to remain CEO.” READ MORE +
Play Smart Offense to take full advantage of tax benefits and increase current or future cash inflow
Smart tax planning is not always about safeguarding against risks and avoiding penalties. If done the right way, you will hear “the crack of the bat” in terms of improving your cash inflows now, and into the future. READ MORE +
How to Employ a Sound Defense Against Tax Liability Risks
Getting an emerging growth company up and running is one of the most exciting and stressful times any entrepreneur can face. It can involve testing the viability of the business model, acquiring paying customers, hiring and managing a new staff, testing the viability of new products or services, finding space for the business and of course starting to raise money. READ MORE +
Raising Funds? Be Sure to Scrub Down the Term Sheet
According to Bruce Gibney (formerly with famed VC firm, Founders Fund) “Venture financing turns on three things: Money, power and ignorance.” He went on to note “These variables converge most violently in the term sheet, which proposes the basic relationship between the venture capitalist and the company. Term sheets have a set of short, formalized components, which in combination quickly become exceedingly tangled and opaque.” READ MORE +
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