New Financial Reporting Standards for Nonprofits
Late last summer, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that simplified and improved how nonprofit organizations tell their stories through their financial statements. These new standards are designed to help nonprofits provide more relevant and useful information about their resources to key stakeholders. READ MORE +
How effectively do you manage risk?
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently updated its enterprise risk management (ERM) framework. READ MORE +
FASB Proposes Improvements to Nonprofit Grant and Contribution Accounting
The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) intended to clarify and improve the accounting guidance for contributions and grants. READ MORE +
How Much is Artificial Intelligence Worth?
Recent breakthroughs and disruptive technologies have made the valuation of emerging companies challenging. The one “looming” question from founders of these companies is: “What is my company really worth?” Or, if you are an investor, “What will I pay for a slice of the multi-trillion-dollar tech sector?” A third perspective might reflect a strategic partner evaluating an acquisition or joint venture opportunity. READ MORE +
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Blog

How nonprofits can successfully execute a capital campaign

When your not-for-profit needs a new facility or an endowment, a capital campaign can be the best way to raise funds. To be successful, your campaign needs a strong leader with vision and stamina. Consider board members or look to community leaders. Next, draw up a list of, say, 1,000 potential donors, and then winnow it to the largest and most likely donors. Be sure to train team members on how to talk to prospects. To make your big goal achievable, break it into smaller objectives and celebrate when you reach each one.  READ MORE +

What you need to know about year-end charitable giving in 2017

Charitable giving can be a powerful tax-saving strategy: Donations are generally fully deductible, and you control when and how much you give. To ensure you receive your desired tax benefits, remember that, to be deductible on your 2017 return, a donation must be made by Dec. 31, 2017, to a “qualified charity” (one eligible to receive tax-deductible contributions). The charitable donation deduction hasn’t been proposed for elimination or reduction under tax reform, but there still may be reasons to maximize charitable giving this year. Contact us to learn more.  READ MORE +

Should you buy a business vehicle before year end?

Buying a business vehicle by December 31 can reduce your 2017 tax bill. The vehicle may qualify for Sec. 179 expensing, allowing you to immediately deduct, rather than depreciate over several years, some or all of the cost. The normal Sec. 179 expensing limit of $510,000 generally applies to vehicles weighing more than 14,000 pounds. A $25,000 limit applies to SUVs weighing less than that but more than 6,000 pounds. Lower limits apply to lighter vehicles. But tax reform could affect whether buying in 2017 or 2018 makes more tax sense.  READ MORE +

5 common sources of substantive audit evidence

Do you understand how auditors verify account balances and transactions? This knowledge can minimize disruptions when auditors conduct fieldwork and maximize your audit’s effectiveness. Five common sources of “substantive evidence” include: 1) confirmation letters, 2) original source documents, 3) physical observations, 4) comparisons to external market data, and 5) recalculations. Before audit season starts, let’s discuss the types of evidence we expect to gather for each financial statement category. We can help you anticipate document requests and inquiries.  READ MORE +

Address your pet in your estate plan using a pet trust

To ensure that your pet is cared for after your death, consider creating a pet trust. It allows you to set aside funds for the animal’s care. After the pet dies, any remaining funds are distributed among your heirs as directed by the trust’s terms. Here’s how it works: You create the trust to take effect either during your lifetime or at death. Typically, a trustee will hold property for the benefit of your pet, and payments to a designated caregiver are made on a regular basis. The trust can also mandate periodic visits to the vet.  READ MORE +

5 strategies for struggling nonprofits

If your not-for-profit is struggling financially, you need to come up with creative ways to generate operating cash flow, such as revisiting your mission and programs. Think about cutting programs that strain cash and staff resources but aren’t critical to your mission. Also examine your investment portfolio for assets that aren’t generating operating income, and review permanently restricted endowments. You may be able to spend what was once untouchable original principal if its donor was silent about restrictions or restrictions are no longer practicable.  READ MORE +

7 last-minute tax-saving tips

The year is quickly drawing to a close, but there’s still time to take steps to reduce your 2017 tax liability. You just must act by December 31. Here are 3 ideas: 1) Pay tuition for academic periods that will begin in January, February or March of 2018 (if it will make you eligible for a tax credit on your 2017 return), 2) sell investments at a loss to offset capital gains you’ve recognized this year, and 3) ask your employer if your bonus can be deferred until January. If you’re unsure whether these steps are right for you, consult us before taking action.  READ MORE +

2018 Q1 tax calendar: Key deadlines for businesses and other employers

Here are a few key tax-related deadlines for businesses during Q1 of 2018. JAN. 31: File 2017 Forms W-2 with the Social Security Administration and provide copies to employees, and provide copies of 2017 Forms 1099-MISC to recipients. FEB. 28: File 2017 Forms 1099-MISC if paper filing. (Forms 1099-MISC reporting nonemployee compensation in Box 7 must be filed by Jan. 31.) MAR. 15: If a calendar-year partnership or S corp., file or extend your 2017 tax return.  READ MORE +

Consider how tax reform would affect your financial statements

How will tax reform legislation affect your financial statements in 2017 and beyond? Proposed changes would lower tax rates, expand the income tax base, reduce or eliminate tax breaks, and shift to a territorial tax regime. If these proposals are signed into law, the effects must be recognized in the period in which the new legislation is enacted, not when the changes go into effect. We can help you anticipate how the effects of tax reform would trickle down to your financial statements and when those changes must be reported.  READ MORE +

Who should be the guardian of your minor children?

If you have minor children, arguably the most important estate planning decision you have to make is choosing a guardian for them. A few issues to consider when evaluating potential guardians include their age and financial situation, their values and parenting philosophy, and whether they have homes large enough to make room for your children. It’s also important to choose a second guardian to serve as a backup if your first choice is unable or unwilling to serve.  READ MORE +

Nonprofits: Get usable results when surveying constituents

To make sound decisions, your not-for-profit’s leadership should periodically survey donors and other constituents. How do you design a survey to ensure a high response rate and constructive feedback? First determine what you want to learn and how you’ll use the data you collect. Keep the focus of your survey sharp, isolating a single issue or initiative, and limit the survey’s length. Ideally, it should take no longer than five minutes to complete. And make sure you write unbiased questions. Don’t lead respondents to the answers you want to hear.  READ MORE +

Even if your income is high, your family may be able to benefit from the 0% long-term capital gains

Even if your income is high, your family may be able to benefit from the 0% long-term capital gains rate. Giving appreciated stock instead of cash to loved ones in the 0% bracket might allow you to eliminate all federal tax liability on the appreciation, or at least significantly reduce it. The recipients can sell the assets at no or a low federal tax cost. Before acting, make sure the recipients won’t be subject to the “kiddie tax.” Also consider any gift and generation-skipping transfer (GST) tax consequences. For more information, contact us.  READ MORE +

Accrual-basis taxpayers: These year-end tips could save you tax

One way accrual-basis taxpayers can save tax is to properly record and recognize expenses incurred this year but that won’t be paid until 2018 so they can be deducted on the 2017 tax return. Common examples include commissions, salaries, wages, payroll taxes, advertising, interest, utilities, insurance and property tax. 2017 may be an especially good year to accelerate deductible expenses. Why? Income tax rates for many businesses could drop significantly in 2018, and deductions save more tax when rates are higher. Contact us for more year-end tax planning tips.  READ MORE +

Tax reform and estate planning: What’s on the table

As tax reform bills wind their way through Congress, details regarding possible estate tax law changes have emerged. The House bill that passed on November 16 increases the gift and estate tax exemption to $10 million (adjusted annually for inflation) and repeals the estate tax after 2024. The gift tax stays in place, but the rate falls to 35% after 2024. The Senate’s bill (as initially approved by the Senate Finance Committee) also doubles the exemption, but doesn’t repeal the estate tax. What ultimately will happen with tax reform legislation is still uncertain.  READ MORE +

Do your financial statements contain hidden messages?

The amounts reported on your financial statements are meaningless without a relevant basis of comparison. Experienced business owners know how to benchmark financial performance by computing financial ratios and comparing them over time and against competitors’ results. Three critical areas to focus on include 1) liquidity, 2) profitability, and 3) asset management. There’s no one-size-fits-all approach to financial benchmarking. Each industry and entity is unique. Contact us for help identifying key performance indicators and evaluating your company’s results.  READ MORE +

When does professional association management make sense?

If your new or growing not-for-profit needs some experienced help, consider contracting with an association management company (AMC). AMCs are paid to manage nonprofit businesses, leaving you to concentrate on your organization’s mission. Their clients pool overhead costs, so you pay only for the services you need, which could also include IT, recruitment, employee benefits or training tasks. Most AMCs provide services based on a flat fee or monthly retainer. Contact us for more information about this option’s benefits and how to assess your outsourcing needs.  READ MORE +

You may need to add RMDs to your year-end to-do list

For most taxpayers “of a certain age” with a tax-advantaged retirement account, as well as younger taxpayers who’ve inherited such an account, it’s critical to take required minimum distributions (RMDs) by year end. After age 70½, you must take annual RMDs from your IRAs (except Roth IRAs) and, generally, defined contribution plans, such as 401(k)s. RMDs also can apply to inherited accounts, including Roth IRAs. If you don’t take RMDs by Dec. 31, you can owe a penalty equal to 50% of the amount you should have withdrawn but didn’t. Contact us with questions.  READ MORE +

Will U.S. Tax Reform Affect Your Real Estate Investments?

Both Congressional Republicans and the Trump administration have announced their intentions to have a new tax reform bill on the President’s desk by the holidays this year. A big part of the proposed tax reform bills that were recently released by the House and Senate deal with the treatment of real estate investments.  READ MORE +

Getting around the $25 deduction limit for business gifts

At this time of year, it’s common for businesses to make thank-you gifts to customers, employees and other business entities. Unfortunately, tax rules limit the deduction for business gifts to only $25 per person per year. But there are exceptions. Here are three: 1) gifts to a company for use in the business, 2) incidental costs of making a gift, such as engraving or shipping, and 3) gifts to employees (though other limits apply and they may be treated as taxable compensation). Be sure to properly track and document qualifying expenses.  READ MORE +

Demystifying the audit process

Many companies don’t know what to expect during a financial statement audit. Basically, your audit team performs five steps: They 1) accept the engagement, 2) assess industry- and company-specific risks, 3) plan audit fieldwork, 4) gather qualitative and quantitative evidence, and 5) communicate an audit opinion regarding the accuracy and integrity of your financial statements. To maximize the efficiency and effectiveness of your next audit, learn what the audit team does behind the scenes and how you can help facilitate each step. Contact us for more details.  READ MORE +

Make the holidays bright for you and your loved ones with annual exclusion gifts

As the holiday season quickly approaches, gift giving will be top of mind, and that should include making annual exclusion gifts before the Dec. 31 deadline. The 2017 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free. An estate tax repeal has been proposed, but even if the estate tax is repealed, it likely won’t be permanent. And current proposals retain the gift tax. So making 2017 annual exclusion gifts can still be a tax-smart move.  READ MORE +

Finding and keeping event sponsors

To line up businesses and individuals to sponsor your not-for-profit’s special events, and retain them over the long term, be sure to target the right prospects. Refer to your mission statement and focus your efforts on sponsors with similar values and objectives. For example, a literacy charity might ask an educational book publisher to sponsor its annual gala. To convince potential sponsors that your event’s audience is the same demographic they want to reach, use factual historical data and never exaggerate.  READ MORE +

Why you may want to accelerate your property tax payment into 2017

Accelerating deductible expenses, such as property tax on your home, into the current year typically is a good idea. Why? It will defer tax, which usually is beneficial. Prepaying your property tax (by Dec. 31) may be especially beneficial this year, because proposed tax legislation might reduce or eliminate the benefit of the property tax deduction beginning in 2018. But it’s still uncertain what the final legislation will contain and whether it will be passed and signed into law this year. We can help you determine the best strategy for your specific situation.  READ MORE +

Reduce your 2017 tax bill by buying business assets

Sec. 179 expensing allows businesses an immediate deduction for the cost of eligible asset purchases (up to certain limits), rather than depreciating them over a number of years. Another depreciation break for assets that qualify is 50% first-year bonus depreciation. To enjoy these breaks on your 2017 tax return, you generally must acquire and place assets in service by Dec. 31. But tax reform could enhance these breaks, so keep an eye on legislative developments as you plan your asset purchases.  READ MORE +

How to prepare WIP reports for long-term contracts

Work-in-progress (WIP) reports can be a powerful management tool to help improve profits on long-term projects. Monitoring WIP reports regularly can help you identify problems. For example, you may discover over- or under-billing and profit fade before these problems spiral out of control, allowing you to take corrective action. But WIP reports are only as reliable as the information they’re based on. We can help you understand how to create these reports, what key information to include and how to decipher any unfamiliar accounting terminology.  READ MORE +

Update your estate plan to reflect your second marriage

If you’re in a second marriage, or planning another trip down the aisle, it’s vital to review your estate plan and update your will, trusts and beneficiary designations to name your current spouse where desired. If you have minor-aged children from a previous marriage, consider establishing a trust that directs a trustee of your choosing to manage its assets and control distributions to or on behalf of your children. Doing so can provide peace of mind that the assets will be managed and distributed per your wishes.  READ MORE +

How nonprofits can maximize donors’ generosity around the holidays

People are naturally inclined to make charitable gifts around the holidays. With the end of the year fast approaching, your not-for-profit should think about how to make the most of the season. One way is to strike early. Plan events or solicitations for early December or sooner, before donor fatigue sets in. And rather than blitz every prospect in your database, identify the best prospects. Past donors are more likely to give again and in larger amounts. Personal appeals can encourage a greater commitment from them.  READ MORE +

Could the AMT boost your 2017 tax bill?

A fundamental tax planning strategy is to accelerate deductible expenses into the current year. This typically will defer (and in some cases permanently reduce) tax. But there are exceptions. One is if the additional deductions this year trigger the alternative minimum tax (AMT). Complicating matters for 2017 is possible tax reform that could repeal the AMT for 2018 and beyond but also limit the benefit of some deductions and eliminate others, making it less desirable to defer expenses to 2018. We can help you determine the best strategies for your situation.  READ MORE +

2017 might be your last chance to hire veterans and claim a tax credit

With Veterans Day on Nov. 11, it’s an especially good time to think about how we can support our veterans. One way businesses can do so is to hire them. An added bonus is that the Work Opportunity tax credit (WOTC) can save tax when you hire from “target groups,” including certain veterans. But it could be repealed as part of tax reform. So you may want to consider hiring veterans before year end. The credit amount depends on the target group, wages paid and hours worked. It ranges from $2,400 to $9,600 per hire.  READ MORE +

Boardroom and management diversity adds value

Boardroom and management team diversity can enhance corporate value. Academic research has found that diverse boards lead to better financial reporting quality and greater management accountability after poor financial performance. The Securities and Exchange Commission already requires limited disclosures on boardroom diversity and has plans to expand them. Private companies can benefit from more diverse insights, too. We can help assess your level of diversity and provide voluntary disclosures that showcase your commitment to race, gender and ethnic diversity.  READ MORE +

The write stuff: A letter of instructions

The centerpiece of your estate plan is a will or living trust. Such a document determines who gets what, where, when and how. Another document to consider including is a “letter of instructions” to your heirs. It has no legal authority but can provide valuable guidance to them. A letter of instructions is more than just a listing of assets and their locations. Typically, it will include other items of a personal nature, such as funeral arrangements and people and organizations to be notified upon your death.  READ MORE +

Dashboards can help nonprofit boards focus on critical goals

Not-for-profit board members need to keep an eye on how well their organizations are meeting key goals and furthering their missions. One of the easiest ways for boards to do this is with a “dashboard” of key performance indicators. Just as an automobile dashboard gives drivers a quick glimpse of their car’s status, a performance dashboard provides an at-a-glance look at an organization’s financial health.  READ MORE +

The ins and outs of tax on “income investments”

All “income investments” (those that pay dividends or interest) aren’t alike when it comes to taxes. Qualified dividends are taxed at your favorable long-term capital gains rate rather than your higher ordinary-income rate. Interest generally is taxed at ordinary-income rates. So stocks paying qualified dividends might be more attractive tax-wise than CDs and bonds. But there are exceptions. For example, some dividends aren’t qualified and are subject to ordinary-income rates, and municipal bond interest is generally tax-free. Contact us for more details.  READ MORE +

Research credit can offset a small business’s payroll taxes

A qualified small business (QSB) eligible for the research tax credit can elect to use up to $250,000 of the credit to reduce its payroll tax bill instead of its income tax bill. Generally, a QSB has gross receipts of less than $5 million for the current tax year and hasn’t existed for more than five tax years. To qualify for the credit, a business’s research activities must meet a four-factor test. Expenses that may qualify include research-related wages and supplies, plus 65% of contracted research expenses.  READ MORE +

A Charitable Remainder Trust Can Provide a Multitude of Benefits

If you’re charitably inclined but concerned about having sufficient income to meet your needs, a charitable remainder trust (CRT) may be the answer. In a nutshell, you contribute stock or other assets to an irrevocable trust that provides you with an income stream for life or for a set term. At the term’s end, the remaining trust assets are distributed to one or more charities you’ve selected. When you fund the trust, you generally can claim a charitable income tax deduction equal to the present value of the remainder interest.  READ MORE +

4 questions to guide your prospective financial statements

CPAs don’t just offer assurance services on historical financial results. They can also prepare prospective financial statements that predict how the company will perform in the future. Asking these four fundamental questions can help you make more accurate assumptions: 1) How far into the future do you want to plan? 2) How steady is your demand? 3) How much data do you have? 4) How do you fill your orders? We can help you answer these questions using the forecasting practices that make sense for your business.  READ MORE +

5 simple steps to a better nonprofit budget

Preparing your not-for-profit’s annual budget can be a painful process, but several steps can help make the process easier. For example, before you start allocating resources, figure out what they are. This includes not only the amount of your income, but its nature. After all, restricted or planned gifts aren’t necessarily available for spending. Also be careful not to underestimate needs when determining the costs of current and future programs. And account for both direct and indirect expenses. (The latter benefit multiple programs.)  READ MORE +

Retirement savings opportunity for the self-employed

Did you know that if you’re self-employed you may be able to set up a retirement plan that allows you to contribute much more than you can contribute to an IRA or even an employer-sponsored 401(k)? There’s still time to set up such a plan for 2017, and it generally isn’t hard to do. Among your options are a profit sharing plan, a Simplified Employee Pension (SEP) plan and a defined benefit plan. Whether you’re a “full-time” independent contractor or you’re employed but earn some self-employment income on the side, contact us to learn more about your options.  READ MORE +

How to maximize deductions for business real estate

Currently, a valuable income tax deduction related to business real estate is for depreciation. But the depreciation period for such property is long, and land itself isn’t depreciable. To maximize your deductions, first segregate personal property from buildings; depreciation deductions for personal property generally can be taken more quickly. Next, carve out depreciable land improvements from land. Examples include landscaping, roads, and even grading and clearing.  READ MORE +

A dynasty trust keeps on giving long into the future

A dynasty trust can protect your wealth from gift, estate and generation-skipping transfer (GST) taxes and help you leave a lasting legacy. Contributions to the trust are considered taxable gifts, but you can minimize taxes by applying your gift and GST tax exemptions. Trust assets can grow and compound indefinitely. The trust makes distributions to future descendants according to criteria you establish. So long as your beneficiaries don’t gain control over the trust, the undistributed assets will bypass their taxable estates.  READ MORE +

Grants can help firm up your nonprofit's financial foundation

There are more than 87,000 foundations in the United States. If your not-for-profit isn’t actively seeking grants from these groups, you’re neglecting a potentially significant income source. Get started by visiting the Foundation Center’s online directory at foundationcenter.org. Then talk to staff members at your target foundations about the kind of information they need. Foundations generally like projects that are well defined and data driven with specific goals.  READ MORE +

2 ACA taxes that may apply to your exec comp

Tax planning for executive compensation such as restricted stock, stock options and nonqualified deferred comp is generally more complex than for salaries, bonuses and traditional employee benefits, especially if you could be subject to the additional 0.9% Medicare tax or the 3.8% net investment income tax. These taxes apply when certain income exceeds the applicable threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other taxpayers. If you’re concerned about how your exec comp will be taxed, contact us.  READ MORE +

Which tax-advantaged health account should be part of your benefits package?

On Oct. 12, an executive order was signed that, among other things, directs the Secretaries of the Treasury, Labor, and Health and Human Services to consider proposing regs or revising guidance to expand the ability of employers to offer Health Reimbursement Arrangements (HRAs). But HRAs are just one type of tax-advantaged account you can provide employees to help fund their health care expenses. Also available are Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs). Which one should you include in your benefits package?  READ MORE +

How do your accounting estimates measure up?

Businesses today face unprecedented uncertainty. So, management’s historical means of making accounting estimates may no longer suffice. Allowances for doubtful accounts, goodwill impairment, uncertain tax positions and other estimates involve a level of measurement uncertainty. And highly uncertain outcomes can lead to unintentional errors or intentional misstatement. With audit season just around the corner, let’s discuss your use of accounting estimates in today’s volatile markets. We can help you facilitate audit fieldwork and minimize audit adjustments.  READ MORE +

Valuing and reporting gifts in kind and donated services

Not-for-profit supporters often donate gifts in kind and services. But properly reporting and assigning value to such donations can be challenging. With gifts in kind, decide whether the item can be used to carry out your mission or sold to fund operations. If so, record its fair market value as a donation and a related receivable (once it’s unconditionally pledged). The value of a donated service should be recognized if it creates or enhances a nonfinancial asset or it requires specialized skills and is provided by a specialist.  READ MORE +

Who should own your life insurance policy?

If you own life insurance policies at your death, the proceeds will be included in your estate. The way around this problem is to not own the policies when you die. Ownership by your children can be a good option when your primary goal is to pass wealth to them. Proceeds aren’t subject to estate tax on your or your spouse’s death, and your children receive all of the proceeds tax-free. On the downside, policy proceeds are paid to your children outright. This may be problematic if a child has creditor problems.  READ MORE +

Don’t ignore the Oct. 16 extended filing deadline just because you can’t pay your tax bill

The extended deadline for filing your 2016 individual federal income tax return is Oct. 16. If you extended your return and know you owe tax but can’t pay the bill, be sure to still file your return by the 16th. This will allow you to avoid the 5%-per-month failure-to-file penalty; you’ll owe only an interest charge. When must you pay the balance due? As soon as possible, if you want to halt the IRS interest charges. You can pay by credit card or take out a loan. But an IRS installment agreement may be less costly. For assistance or more information, contact us.  READ MORE +

Accelerate your retirement savings with a cash balance plan

A cash balance plan can turbocharge a business owner’s retirement savings. In 2017, employer contributions and employee deferrals to defined contribution plans like 401(k)s are limited to $54,000 ($60,000 for employees age 50 or older). Nondiscrimination rules that prevent a plan from favoring highly compensated employees can further reduce contributions to an owner’s account. But cash balance plans are instead subject to a cap on annual benefit payouts in retirement, and contributions may be as high as necessary to fund those benefits.  READ MORE +

Intellectual Property and Transfer Pricing Implications of Changing Global Taxation Policies

In October 2015, the OECD issued a report on its G-20 BEPS Project (Base Erosion and Profit Shifting) – which focused on providing governments with solutions for closing the gaps in existing international tax and transfer pricing rules that allow corporate profits to “disappear”, or be artificially shifted to low/no tax environments where little or no economic activity takes place. Much of BEPS centers on intellectual property (IP)-intensive industries.  READ MORE +

Strong internal controls help reduce restatements

Financial restatements among public companies are at the lowest level in 15 years. A recent study by research firm Audit Analytics attributes the decrease, in large part, to stronger internal controls. If you want to beef up your company’s controls, consider following the framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Auditors use COSO’s framework to evaluate their clients’ internal controls. Our audit team can help you turn the framework’s abstract concepts into actionable items. Contact us for details.  READ MORE +

A Crummey trust can preserve the annual gift tax exclusion

The $14,000 annual exclusion is limited to gifts of a “present interest,” defined by IRS regulations as “an unrestricted right to the immediate use, possession, or enjoyment of property or the income from property.” Generally, gifts to a trust designed to distribute assets to beneficiaries at a future date won’t qualify. But a Crummey trust satisfies the present interest requirement by giving beneficiaries the right to withdraw trust contributions for a limited period of time. There are additional rules and tax consequences to consider, so contact us for details.  READ MORE +

Are term limits right for your nonprofit’s board members?

Term limits for not-for-profit board members can be a double-edged sword. They may allow you to easily let go of unsuccessful members without hurting their feelings and create an opportunity for new members with fresh ideas and perspectives to come on board. On the other hand, they may cause you to lose your most dedicated and active members. Also, term limits force your organization to look for qualified replacements and train them more often than you’d probably like. Carefully consider the pros and cons before choosing term limits. Contact us for help.  READ MORE +

“Bunching” medical expenses will be a tax-smart strategy for many in 2017

Out-of-pocket medical expenses may be deductible if they exceed 10% of your adjusted gross income. By “bunching” nonurgent medical expenses into alternating years, you may be able to exceed the floor. The “Unified Framework for Fixing Our Broken Tax Code” President Trump and congressional Republicans released on Sept. 27 proposes, among other things, increasing the standard deduction and eliminating most itemized deductions, which likely would include the medical expense deduction. So bunching such expenses into 2017 may be tax-smart. Contact us to learn more.  READ MORE +

New Financial Reporting Standards for Nonprofits

Late last summer, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that simplified and improved how nonprofit organizations tell their stories through their financial statements. This has been achieved by redefining classifications and how organizations report net assets, as well as other financial information. These new standards are designed to help nonprofits provide more relevant and useful information about their resources to key stakeholders – including donors, board members, grantors, creditors and tax authorities.  READ MORE +

Timing strategies could become more powerful in 2017, depending on what happens with tax reform

Typically, it’s better for businesses to defer tax by deferring income to the next year and accelerating deductible expenses into the current year. These strategies could be particularly powerful if tax legislation is signed into law reflecting the “Unified Framework for Fixing Our Broken Tax Code” released by President Trump and congressional Republicans on Sept. 27. Among other things, the framework calls for reduced tax rates for corporations and flow-through entities as well as the elimination of many business deductions. Contact us for more information.  READ MORE +

Tax law uncertainty requires an estate plan that can roll with the changes

Taxes are anything but certain. So how can you plan your estate when the tax landscape may look dramatically different in the future? Take a flexible approach that allows you to hedge your bets. An irrevocable trust can make it possible to remove assets from your estate now, but give the trustee the authority to force the assets back into your estate if that turns out to be the better strategy. For the technique to work, you must retain no control over the trust assets and the trustee should have absolute discretion over distributions. Contact us to learn more.  READ MORE +

Don’t let a crisis KO your nonprofit’s special event — plan ahead

Most not-for-profits depend on a big annual event to raise significant funds or attract new members. But as any experienced event planner can tell you, almost no benefit, gala or conference goes off without at least a small hitch. To head off the big hitches, create a crisis management plan that addresses key risks such as severe weather, travel restrictions and natural disasters and lists emergency contact numbers for staffers and vendors. Also ensure that your insurance policy provides adequate coverage. Contact us for help addressing special event risks.  READ MORE +

Investors: Beware of the wash sale rule

If you’ve cashed in some big gains this year, consider looking for unrealized losses in your portfolio and selling those investments before year end to offset your gains. This can reduce your 2017 tax liability. But beware of the wash sale rule. It prevents you from taking a loss on a security if you buy a substantially identical security within 30 days before or after you sell the security creating the loss. You can recognize the loss only when you sell the replacement security. Contact us to learn more about the ins and outs of saving taxes on your investments.  READ MORE +

2 ways spouse-owned businesses can reduce their self-employment tax bill

If you own an unincorporated business with your spouse, you may face high self-employment (SE) taxes. An unincorporated business in which both spouses are active is typically treated by the IRS as a partnership owned 50/50 by the spouses. For 2017, that means you’ll each pay the maximum 15.3% SE tax rate on the first $127,200 of your respective shares of net SE income from the business. But if you can establish that your business is a sole proprietorship or that the partnership isn’t 50/50, you might save SE tax. Contact us to learn more about reducing SE taxes.  READ MORE +

How effectively do you manage risk?

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently updated its enterprise risk management (ERM) framework. The update includes five components: 1) governance and culture, 2) strategy and objective setting, 3) performance, 4) review and revision, and 5) information, communication and reporting. Effective ERM encompasses more than taking an inventory of your risks; it should be an entitywide process for proactively managing risk. Contact us for help adopting cost-effective ERM practices to help make your business more resilient.  READ MORE +

ABCs of HSAs: How an HSA can benefit your estate plan

A Health Savings Account (HSA) is a tax-advantaged way to both pay for health care costs and pursue your estate planning goals. HSAs, which must be paired with a high-deductible health plan, allow pretax contributions and tax-free withdrawals for qualified medical expenses. Unused HSA balances can supplement retirement income or continue growing on a tax-deferred basis for your family’s future benefit. But if you name someone other than your spouse as beneficiary, he or she will owe income tax on the HSA balance at your death. Contact us to learn more.  READ MORE +

Make endowment funding your nonprofit’s ally

Income from endowment funds may be able to help your nonprofit meet operating expenses, ease cash-flow problems and supplement your annual budget. But you need to control your spending policy. Assuming funds aren’t restricted, nonprofits in most states must conform to provisions of the Uniform Prudent Management of Institutional Funds Act. Within those constraints, define how much of your fund’s income can be spent on operations each year. Generally, this percentage is between 4% and 7% of your average investments. Contact us for additional help.  READ MORE +

Why you should boost your 401(k) contribution rate between now and year end

If you’re not making the maximum 401(k) contribution allowed ($18,000, or, if age 50 or older, $24,000), consider increasing your contribution rate through year end. Traditional 401(k) contributions are pretax, plan assets can grow tax-deferred (you pay no income tax until you take distributions), and your employer may match some or all of your contributions pretax. Plus your paycheck will be reduced by less than the dollar amount of the contribution, because income tax isn’t withheld. Contact us to discuss the best tax and retirement-saving strategies for you.  READ MORE +

Should your business use per diem rates for travel reimbursement?

If business-travel expenses are properly accounted for, reimbursements are generally tax-free to the employee and deductible by the employer. But keeping track of actual costs can be a headache. With per diem rates, employees don’t have to keep receipts; they just document the travel’s time, place and business purpose. The employer simply pays the employee the per diem for the travel destination and deducts it. Rates include lodging, meals and incidental expenses but not transportation. Updated travel per diem rates go into effect Oct. 1. Contact us for details.  READ MORE +

Charitable giving pièce de résistance: Artwork donations

Charitable giving is a key part of estate planning for many people. If you’re making gifts during life, generally, it’s advantageous to donate appreciated property to avoid capital gains tax. Because the top capital gains rate for art is 28%, donating art can be particularly effective. Be sure to have art appraised by a “qualified” appraiser. IRS rules detail requirements for appraiser qualifications and appraisal contents. Plus, IRS auditors are required to refer all gifts of art valued at $20,000 or more to the IRS Art Advisory Panel. Contact us to learn more.  READ MORE +

Save more for college through the tax advantages of a 529 savings plan

With kids back in school, it’s a good time for parents (and grandparents) to think about college funding. One option is a Section 529 plan. It offers the opportunity to build up a large college nest egg via tax-deferred compounding and can be particularly powerful if contributions begin when the child is quite young. Contributions aren’t deductible for federal purposes, but distributions used to pay qualified expenses are typically income-tax-free for both federal and state purposes, thus making the tax deferral a permanent savings. Contact us to learn more.  READ MORE +

2017 Q4 tax calendar: Key deadlines for businesses and other employers

Here are a few key tax-related deadlines for businesses and other employers during Quarter 4 of 2017. OCT. 16: If calendar-year C corp. that filed an extension, file a 2016 income tax return. OCT. 31: Report income tax withholding and FICA taxes for Q3 2017 (unless eligible for exception). DEC. 15: If calendar-year C corp., pay fourth 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 +

GAAP vs. tax-basis reporting: Choosing the right model for your business

Most U.S. businesses use Generally Accepted Accounting Principles (GAAP) to report their financial results. However, some businesses use tax-basis reporting to save time and money. Key differences between these two frameworks can potentially lead to apples-to-oranges comparisons. For example, tax law tends to favor accelerated gross income recognition and depreciation deductions, and not allow taxpayers to deduct other business expenses until the amounts are known. Contact us to discuss the optimal reporting model for your business.  READ MORE +

Use a giving day to raise money — and awareness — for your nonprofit

Giving Tuesday was created to encourage Americans to contribute to charity during the holiday season. On the first Tuesday after Thanksgiving (Nov. 28 in 2017), not-for-profit participants use social media to raise money, educate the public about issues and encourage people to volunteer in their communities. If your nonprofit hasn’t made plans to participate, it’s not too late. Try a simple, focused goal your first year. For example, use Giving Day to remind supporters to make their tax deductible gifts by year end. Contact us for more fundraising ideas.  READ MORE +

Tax planning critical when buying a business

To improve the odds of a successful acquisition, it’s important to devote resources to tax planning before your deal closes. For example, discuss whether and how much each party can deduct their transaction costs and how much in local, state and federal tax obligations the parties will owe upon signing the deal. And if you and your seller use different tax processing software or follow different accounting methods, you need to choose between them as soon as feasible. We can help you ensure you plan properly and minimize any potentially negative tax consequences.  READ MORE +

Reasons to outsource payroll and obtain a service audit report

This Labor Day, do two favors for your employees. First, minimize payroll reporting and expense reimbursement errors by switching to an outside payroll company. Second, protect employees’ personal data by obtaining a copy of the payroll provider’s SAS 70 service audit report. These audits evaluate the payroll provider’s controls. If your payroll provider doesn’t have a service audit report, contact us. We can discuss the adequacy of controls with your service provider and plan our financial statement audit accordingly.  READ MORE +

Estate tax relief for family businesses is available … in the form of a deferral

If a portion of your wealth is tied up in a closely held business, your estate may lack enough liquid assets to pay estate taxes. Internal Revenue Code Section 6166 permits qualifying estates to defer a portion of their estate tax liability for up to 14 years from the date the tax is due. During the first four years of the deferment period, the estate pays interest only, followed by 10 annual installments of principal and interest.  READ MORE +

Prepare financial statements that will impress your nonprofit’s stakeholders

Audited financial statements can help assure funders and lenders that your not-for-profit is financially sound. But there are three critical audit issues to understand when preparing statements: 1) Your auditor’s role is to provide an opinion on whether statements are free of material misstatements, 2) your board should play a strategic, oversight role in the process, and 3) statements should be analyzed to help you manage your organization. Contact us for help preparing audited financial statements.  READ MORE +

The ABCs of the tax deduction for educator expenses

Elementary and secondary school teachers and other eligible educators can deduct up to $250 for qualifying classroom supplies they pay for out of pocket. This is an “above-the-line” deduction, which means you don’t have to itemize. Before this special break became available, such expenditures could be deducted only as unreimbursed business expenses under the miscellaneous itemized deduction, subject to a 2% of adjusted gross income (AGI) floor, which could be a difficult threshold to meet. Contact us for details on the educator expense deduction.  READ MORE +

Larger deduction might be available to businesses providing meals to their employees

When a business provides meals to its employees, generally its tax deduction is limited to 50%. But there are exceptions. One is if the meals qualify as a de minimis fringe benefit. A recent U.S. Tax Court ruling could ultimately mean that more employer-provided meals will be 100% deductible under this exception. The court found that the Boston Bruins hockey team’s pregame meals to players and personnel at out-of-town hotels qualified as a de minimis fringe benefit. But the facts of this case are specific and restrictive. Contact us to learn more.  READ MORE +

Supplement your financial statements with timely flash reports

GAAP financial statements can take weeks or months to prepare. If you want more timely information, consider daily or weekly “flash reports” that provide a simplified snapshot of key financial figures. Flash reports help management proactively identify and respond to problems and weaknesses. But these reports might not always be 100% accurate, and some items might ebb and flow throughout the billing cycle. So, exercise caution when sharing these reports with stakeholders. We can help customize an effective flash report based on what matters most in your industry.  READ MORE +

Have you properly funded your revocable trust?

If your estate plan includes a revocable trust (also known as a “living trust”), it’s critical to ensure that the trust is properly funded. Revocable trusts offer significant benefits, including asset management (in the event you become incapacitated) and probate avoidance. But these benefits aren’t available if you don’t fund the trust. To do so, transfer ownership of assets to the trust. Don’t forget to transfer newly acquired assets to the trust to ensure they enjoy its benefits. Also be aware that certain assets shouldn’t be moved to the trust, such as IRAs.  READ MORE +

How your nonprofit can avoid investment fraud

Investment fraud can cause significant financial losses for not-for-profits. But the harm it could cause your reputation with donors and the public may be even worse. To avoid hiring a crooked investment advisor, beware of unrealistic promises, such as annual returns of 20%. Also be wary of fund managers who don’t submit to outside audits or report their results publicly. Instead, look for an advisor who encourages you to discuss goals and risk concerns, and who understands your investment philosophy. Contact us for help finding a trustworthy advisor.  READ MORE +

Yes, you can undo a Roth IRA conversion

If you convert a traditional IRA to a Roth but discover you’d be better off if you hadn’t converted, it’s possible to undo it. This may be beneficial if the conversion pushes you into a higher tax bracket, you expect your tax rate to go down or the account value has declined. Generally, if you extend your tax return, you have until Oct. 15 of the following year to undo a conversion. (For 2016 returns, the deadline is Oct. 16.) It may make sense to undo the conversion and then redo it. We can provide details on the rules and help you assess your options.  READ MORE +

Could captive insurance reduce health care costs and save your business taxes?

Could a captive insurance company reduce health care costs and save your business taxes? A captive generally is wholly owned and controlled by the employer, like forming your own insurance company. You can customize coverage and charge premiums that more accurately reflect your loss exposure. And you can participate in the captive’s underwriting profits and investment income. Premiums paid to the captive are tax-deductible, and the captive can deduct most of its loss reserves. Contact us to learn more about the tax treatment and other pros and cons.  READ MORE +

Credit loss standard: The new CECL model

A new accounting standard on credit losses goes into effect in 2020 for public companies and 2021 for private ones. It replaces the existing “incurred loss” model that financial institutions use now with a new “current expected credit loss” model. By focusing on forward-looking information, the new model will result in earlier recognition of losses and better meet the needs of financial statement users who, leading up to the global financial crisis, were making independent estimates of institutions’ expected credit losses. We can help you apply the new guidance.  READ MORE +

Create a nonprofit executive search plan — before it becomes necessary

Even if there’s no immediate need for your not-for-profit to hire an executive, it’s smart to prepare for the process. That way, you’ll be ready to execute a search when the time arrives. Start by forming a search team made up of board members. This team should draft executive job descriptions that detail the knowledge, skills and attitudes required for positions and discuss compensation philosophy. For example, will your nonprofit compensate in line with similar nonprofits or with similar for-profit positions? Contact us for more compensation information.  READ MORE +

How to determine if you need to worry about estate taxes

One tax being considered for repeal as part of tax reform is the estate tax. It applies to transfers of wealth at death. Its sibling, the gift tax (also being considered for repeal) applies to transfers during life. Yet most taxpayers won’t face these taxes even if they remain in place. For 2017, the federal lifetime gift and estate tax exemption is $5.49 million. Any gift tax exemption you use during life does reduce the amount of estate tax exemption available at your death, but every gift you make won’t use up part of your exemption. Contact us for details.  READ MORE +

Put your audit in reverse to save sales and use tax

A reverse audit can help your business find sales and use tax overpayments so you can seek refunds. States may exempt, for example, equipment and utilities used in manufacturing, and custom software, computers and peripherals used for research and development. Unless you’re diligent, you may be missing out on some exemptions to which you’re entitled. A reverse audit can allow you to not only reap tax refunds now for missed exemptions but also update your compliance systems to help ensure you don’t overpay in the future. Contact us to learn more.  READ MORE +

FASB Proposes Improvements to Nonprofit Grant and Contribution Accounting

The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) intended to clarify and improve the accounting guidance for contributions and grants. There has always been some “gray area” in determining whether a grant is an exchange transaction or a contribution – depending on whether the contributor/grantor (the resource provider) received something of approximate equal value in exchange for the resources transferred. Distinguishing between contributions and exchange transactions determines which accounting guidance to follow.  READ MORE +

Close-up on cutoffs for reporting revenues and expenses

Timing is critical in financial reporting. Under the accrual basis of accounting, the end of the accounting period serves as a “cutoff” for when companies recognize revenues and expenses. However, some companies may be tempted to play timing games to boost financial results or lower taxes. As you adopt new principles-based guidance on reporting contract revenues, expect auditors to pay more attention to accounting cutoffs. Contact us for help complying with the rules and minimizing audit adjustments next audit season.  READ MORE +

Beware the GST tax when transferring assets to grandchildren

Despite a generous $5.49 million generation-skipping transfer (GST) tax exemption, complexities surrounding its allocation can create tax traps. The GST tax is a flat, 40% tax on transfers to “skip persons,” such as family members more than a generation below you. To take full advantage of the GST tax exemption, you (or your estate’s representative) must properly allocate it to specific gifts and bequests. If you don’t, you could trigger a costly GST tax bill. But the GST tax might be repealed. Contact us for more information on GST tax planning or tax law changes.  READ MORE +

Rev up retirement offerings with an NQDC plan

Highly compensated owners and executives often struggle to save enough money to maintain their lifestyles in retirement. A nonqualified deferred compensation (NQDC) plan can help. It’s an agreement that the business will pay out in the future, such as during retirement, compensation that participants earn now. The nondiscrimination rules, contribution limits and distribution rules that apply to most retirement plans don’t apply to NQDC plans. But they are subject to other strict rules. Let us help you decide whether an NQDC plan is a good option for your business.  READ MORE +

Is one of your nonprofit’s board members behaving badly?

Your not-for-profit has probably spent a lot of time and effort finding knowledgeable, enthusiastic and committed board members. Unfortunately, what begins as a good relationship can sour over time. If a member consistently monopolizes discussions, treats peers disrespectfully, seems motivated by personal agendas or violates your nonprofit’s policies (for example, on conflicts of interest), you may need to “fire” him or her. Frequently missing meetings or being unwilling to accept or complete tasks also may warrant removal from the board.  READ MORE +

Will Congress revive expired tax breaks?

Most of the talk about possible tax legislation has focused on wide-sweeping tax reform and taxes under the Affordable Care Act. But another question is whether Congress will extend through 2017 some valuable breaks for individuals that the 2015 PATH Act extended only through 2016. One is the above-the-line deduction for higher education tuition and related expenses. Another is the mortgage insurance premium deduction. And then there’s the exclusion from gross income for mortgage loan forgiveness. Contact us for more information. We’ll keep you up to date.  READ MORE +

Material participation key to deducting LLC and LLP losses

If your business is a limited liability company (LLC) or limited liability partnership (LLP) and you can be considered a general partner, you can meet any one of 7 “material participation” tests to avoid passive treatment under the passive activity loss rules. The rules prohibit taxpayers from offsetting losses from passive business activities (such as limited partnerships or rental properties) against nonpassive income (such as wages, interest, dividends and capital gains). Contact us to learn about the 7 tests and how to ensure you can meet at least one of them.  READ MORE +

How Much is Artificial Intelligence Worth?

Recent breakthroughs and disruptive technologies have made the valuation of emerging companies challenging. The one “looming” question from founders of these companies is: “What is my company really worth?” Or, if you are an investor, “What will I pay for a slice of the multi-trillion-dollar tech sector?” A third perspective might reflect a strategic partner evaluating an acquisition or joint venture opportunity.  READ MORE +

Use a noncharitable purpose trust to achieve a variety of goals

Generally, trusts must have one or more human beneficiaries, but there’s an exception for certain “purpose” trusts, such as a noncharitable purpose (NCP) trust. To be valid, an NCP must meet three requirements: 1) Have a purpose that’s certain, reasonable and attainable, 2) not violate public policy, and 3) be capable of enforcement. Typically, an NCP trust is enforced by an “enforcer,” who ensures that the trust’s purpose is fulfilled, and/or a “trust protector,” who’s empowered to modify the trust when its purpose has been achieved or is no longer relevant.  READ MORE +

4 tough questions to ask before expanding to a new location

When a business reaches a certain level of success, adding another location might seem like a no-brainer. But be careful. First ask yourself some tough questions about whether that new location will grow your company or stretch it too thin. For example, is there a solid strategic plan driving the expansion? Can your current location sustain its success while you set up shop elsewhere? Is the proposed location already overrun with competitors? Are there other, less risky ways to grow? We can help you analyze your financials to answer these questions and many more.  READ MORE +

Reporting collaborative activities: A complex issue for nonprofits

Many not-for-profits join forces to better serve their clients and cut costs. But even a simple collaborative arrangement can involve complex financial reporting obligations. Costs incurred and revenues generated from transactions with third parties should be reported, on a gross basis on the statement of activities, by the nonprofit that’s considered the “principal” for that arrangement. Payments should be presented according to their nature and certain disclosures should be made by participants. Contact us for more information about reporting joint activities.  READ MORE +

A refresher on the ACA’s tax penalty on individuals without health insurance

With repeal and replace efforts apparently having collapsed for now, it’s a good time for a refresher on the Affordable Care Act’s tax penalty on individuals without “minimum essential” health coverage. The 2017 penalty generally is the greater of: 1) 2.5% of household income above the taxpayer’s filing threshold, or 2) $695 ($347.50 for household members under age 18) times the number of uninsured individuals in a household, limited to $2,085. But the penalty can’t exceed the national average cost of bronze coverage for the household. Contact us for details.  READ MORE +

6 ways to control your unemployment tax costs

Typically, the more unemployment claims made against a business, the higher the unemployment tax bill. But there are ways to control your unemployment tax costs. First, don’t hire employees to fill potentially short-term needs. To avoid layoffs, use temps instead. If you must hire, hire carefully to increase the likelihood that new employees will work out. And if you must terminate someone, provide severance (which may delay the start of unemployment benefits) and outplacement services (which, if successful, will hasten their end). Contact us for more ideas.  READ MORE +

Don’t overlook tax apportionment when planning your estate

If you expect your estate to have a significant estate tax liability at your death and you want to avoid unintended consequences, be sure to include a well-drafted tax apportionment clause in your will or revocable trust. This clause specifies how the estate tax burden will be allocated among beneficiaries. One apportionment option is to have all taxes paid out of assets passing through your will. Beneficiaries receiving assets outside your will (such as IRAs or life insurance proceeds) won’t bear any tax burden. But other options might better fit your wishes.  READ MORE +

Should your nonprofit accept digital currency donations?

Despite the fact that United Way now accepts Bitcoin donations, many not-for-profits remain wary of money that’s neither printed nor backed by a central bank. But there are potential advantages to accepting Bitcoins and other digital currencies. For example, you may be able to accept donations from people worldwide who don’t have easy access to global financial systems. Also, these transactions tend to be low- or no-cost, and there may be tax benefits for donors. But accepting digital currencies also involves significant risk. Contact us for more information.  READ MORE +

Listening to your customers by tracking lost sales

“Sorry, we can’t help you.” How many times a year do your salespeople say this? Putting a number on lost sales can tell you much about what your customers want. Start by having sales staff log every customer request. Then develop a report that lays out key information, such as estimated potential purchases, lost sales and lost gross profit. Last, run the report monthly and discuss it with your management team to determine your best strategic opportunities. We can assist you in creating a lost sales tracking system that best suits your company’s distinctive needs.  READ MORE +

3 midyear tax planning strategies for individuals

Here are three tax strategies for individuals that can be more effective if you begin executing them midyear: 1) Take steps to stay out of a higher tax bracket, such as deferring income and accelerating deductible expenses or shifting income to family members in lower tax brackets. 2) Sell depreciated investments to generate losses to offset gains you’ve realized this year. 3) Try to bunch medical expenses into every other year to exceed the adjusted gross income floor for deductibility. Contact us for the ins and outs of these and other midyear strategies.  READ MORE +

ESOPs offer businesses tax and other benefits

An employee stock ownership plan (ESOP) is a qualified retirement plan that invests in the business’s own stock and offers valuable tax benefits. The business’s contributions are typically tax-deductible. Dividends paid on ESOP stock passed through to employees or used to repay an ESOP loan, and dividends voluntarily reinvested by employees in company stock in the ESOP, may also be deductible. And shareholders might be able to sell stock to the ESOP and defer federal income taxes on any gains from the sale. Much depends on entity type. Contact us to learn more.  READ MORE +

The stretch IRA: A simple yet powerful estate planning tool

The IRA’s value as a retirement planning tool is well known. But if you don’t need an IRA to fund your retirement, you can use it as an estate planning tool to benefit your children or other beneficiaries on a tax-advantaged basis by turning it into a “stretch” IRA. It’s simply a matter of designating a beneficiary who’s significantly younger than you. This could be, for example, your spouse (if there’s a substantial age difference between the two of you), a child or a grandchild. You can also name a trust as beneficiary. Contact us for details.  READ MORE +

Does your business have too much cash?

For business owners, an excess of cash may sound like a nice problem to have. But companies that hoard money often do themselves more harm than good. Bank accounts usually generate returns that are much below the interest rates businesses pay on their debts, such as mortgages and credit lines, making carrying cash costly. There are many ways to reinvest a cash surplus to earn a higher return. For instance, you could repay those debts, invest in marketable securities, or even acquire a competitor (or its assets). We can help you identify your optimal cash balance.  READ MORE +

Nonprofits: Harness the power of the personal appeal

People don’t give to causes. They give to those asking on behalf of a cause. That’s why a personal appeal to family and friends continues to be such a powerful not-for-profit fundraising tool, particularly for board members with extensive address books. When approaching potential donors, board members should humanize their appeal, relating how their own experiences have drawn them to the cause. They also should emphasize benefits such as public recognition and networking opportunities. Contact us for more ideas on using personal appeals to raise funds.  READ MORE +

Nonqualified stock options demand tax planning attention

If you work for a corporation, you might receive nonqualified stock options (NQSOs). If the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for. NQSOs create compensation income taxed at ordinary-income rates on the “bargain element” (the difference between the stock’s fair market value and the exercise price) when exercised, regardless of whether the stock is held or immediately sold. You may need to make estimated tax payments or increase withholding to cover the tax. Have questions about NQSOs? Contact us.  READ MORE +

Look beyond EBITDA

EBITDA (earnings before interest, taxes, depreciation and amortization) gained popularity as a leveraged buyout tool in the 1980s. Today, it’s one of the most quoted performance metrics in the “management discussion and analysis” section of public companies’ financials. But EBITDA can be misleading, because 1) the term isn’t defined by formal guidance, and 2) it fails to consider changes in working capital, income taxes, principal repayments and capital expenditures. Never rely on EBITDA alone: Consult with us to perform a comprehensive financial analysis.  READ MORE +

3 midyear tax planning strategies for business

It’s unclear whether tax reform will be passed this year, so let’s look at three midyear business tax strategies inspired by the last major tax law, the PATH Act of 2015: 1) Buy equipment. The PATH Act preserved generous limits for the Section 179 expensing election and the availability of bonus depreciation. 2) Ramp up research. After years of uncertainty, the PATH Act made the research credit permanent. 3) Hire workers from “target groups.” The PATH Act extended the Work Opportunity credit for such hires through 2019. Contact us for details on these breaks.  READ MORE +

ABLE accounts can benefit loved ones with special needs

If in your estate planning you’d like to provide for a loved one with a significant disability, consider an ABLE account. You can make nondeductible annual cash contributions to a qualified beneficiary’s ABLE account up to the federal gift tax annual exclusion amount (currently, $14,000). To qualify, a beneficiary must have become blind or disabled before age 26. The account grows tax-free, and withdrawals of earnings are tax-free if used to pay “qualified disability expenses.” Among other things, these include health care, education, housing and transportation.  READ MORE +

Make sure your company is prepared for any disaster

What could shut down your company? A fire or flood? Maybe a hacker’s attack? Every business needs a disaster recovery plan that targets specific threats to its operations. Describe your risks in detail and create safeguards against them, such as identifying alternative suppliers and engaging an emergency IT service. Also, appoint and train an employee to speak on your company’s behalf and facilitate postcrisis communication. Review the plan at least annually and keep it fresh in employees’ minds. We can help identify cost-effective ways to safeguard your company.  READ MORE +

When does your nonprofit owe UBIT on investment income?

Although dividends, interest, rents, annuities and other investment income generally are excluded when calculating a not-for-profit’s unrelated business income tax (UBIT), there are two exceptions. The first is when your nonprofit incurs debt to acquire an income-producing asset. The portion of the income or gain that’s debt-financed is generally subject to UBIT. The second is when income is received from a for-profit subsidiary or controlled nonprofit. To learn the details and ensure your nonprofit is complying with the IRS’s UBIT rules, contact us.  READ MORE +

How to Effectively Navigate Intellectual Property Tax Planning

Intellectual property (IP) is often considered a critical strategic component of growing a business. While intangible, IP rights can be one of the most important assets your business owns. Understanding the legal and tax implications of IP business transactions can be daunting; and many experts consider that an understatement.  READ MORE +

Own a vacation home? Adjusting rental vs. personal use might save taxes

Own a vacation home? Adjusting rental vs. personal use might save taxes. If you rent out the home for less than 15 days, you don’t have to report the income, but rental expenses aren’t deductible. If you rent it out for 15 days or more, you must report the income, and deductibility of expenses depends on how the home is classified for tax purposes, based on personal vs. rental use. Adjusting the number of days you rent it out and/or use it personally between now and year end might allow the home to be classified in a more beneficial way. Contact us to learn more.  READ MORE +

All fringe benefits aren’t created equal for tax purposes

All fringe benefits aren’t created equal for tax purposes. Generally: Taxable benefits (cash bonus, personal use of company vehicle) are subject to income and employment taxes. Nontaxable benefits (working-condition and de minimis fringe benefits, work-related travel expenses, health plan premiums) aren’t subject to any taxes. Partially taxable benefits (public transportation subsidies) are excluded up to a certain dollar limit. Tax-deferred benefits (retirement plans) aren’t taxed when received but are taxed later. Additional rules apply. Contact us for details.  READ MORE +

IRS simplifies procedure for obtaining extension to make portability election

The IRS has eased portability election rules. Portability allows a surviving spouse to use the deceased spouse’s unused estate tax exemption (currently $5.49 million). Previously, if a deceased spouse’s estate failed to make a timely portability election, the only recourse was to request a private letter ruling. Rev. Proc. 2017-34 grants an automatic extension for taxpayers not otherwise required to file an estate tax return, provided they file a return making the election on or before the later of the second anniversary of the deceased’s death or January 2, 2018.  READ MORE +

Summer is a good time to start your 2017 tax planning and organize your tax records

If you start planning now, you may avoid a tax surprise next April. For example, if you experience a life change (e.g., marriage or birth of a child), you may need to adjust your tax withholding by filing a new Form W-4 with your employer. Summer is also a good time to organize your tax records. Put your 2016 return and supporting records together in a safe but accessible place, such as a home safe or bank safe deposit box. And make tax time easier next year by putting records you’ll need (donation and out-of-pocket medical expense receipts, etc.) in one place.  READ MORE +

Why your nonprofit must avoid excess benefit transactions

Not-for-profits ignore the IRS’s private benefit and private inurement provisions at their own peril. The rules prohibit individuals inside or outside a nonprofit from reaping an excess benefit from its transactions. Violations can have devastating consequences, including loss of exempt status. And individuals involved may be subject to significant excise tax penalties. To protect your organization, document all transactions to insiders so you can later prove they were reasonable and made for an exempt purpose. Questions? Contact us.  READ MORE +

Fine-tuning your company’s compensation strategy

As a company evolves, so must its compensation strategy. Business growth, economic changes or the rise of a tough competitor can all spur the need. Consider the going market rates for your positions, using available data and even a consultant’s input. Then group together similarly valued jobs to establish a competitive salary range consisting of a minimum, maximum and midpoint. The midpoint is particularly important because it’s your guideline for slotting positions into the right ranges. For help specific to your company’s needs, please contact us.  READ MORE +

Respecting auditor independence

Independence is a critical part of an auditor’s ethical requirements. When assessing auditor independence, we consider whether an assignment 1) creates a mutual or conflicting interest, 2) puts the auditor in a position of auditing his or her own work, 3) results in the auditor acting as a member of management or an employee of its audit client, or 4) positions the auditor as an advocate of a client. If any of these conditions are met, auditor independence may be compromised. We can help public and private companies address auditor independence issues.  READ MORE +

Keep real estate separate from your business’s corporate assets to save tax

Many businesses operate as C corporations so they can buy and hold real estate just as they do equipment, inventory and other assets. But this can be a costly mistake: If the real estate is sold, any profit is subject to double taxation, first at the corporate level and then at the owner’s individual level on distributions. If real estate is held instead in a pass-through entity, such as a limited liability company (LLC), and then leased to the corporation, profit on a sale of the property is taxed only once, at the individual level. Contact us for details.  READ MORE +

Managing the risks of your nonprofit’s special events with insurance

Risks associated with not-for-profit special events run the gamut from accidents and personal injury, to fraud and theft, to cancellation due to inclement weather or nonappearance by a featured performer. It’s possible to buy designated “special events insurance,” but such policies can be expensive. Instead, you may want to find out whether you can extend (for a one-time additional premium) a current insurance policy, such as general liability, D&O or fidelity, to cover your event. Contact us for more information on managing risk.  READ MORE +

Why business owners should regularly upgrade their accounting software

Years ago, all a business owner needed was a big, leather-bound ledger on the desk. These days, regularly upgraded accounting software is a must. Why? As a system ages, bad data can build up and adversely affect financial reporting. Ever heard the term “garbage in, garbage out”? It’s true. In addition, by regularly upgrading your accounting software, you may be able to identify better ways to manage expenses and handle internal controls. Let our firm help you set a budget for regular upgrades and choose the products that best suit your company’s needs.  READ MORE +

What might happen if a 15% business tax rate becomes law?

President Trump has proposed a 15% federal income tax rate on business income — whether it’s earned by a traditional C corporation or by a pass-through entity such as an S corporation, limited liability company (LLC), partnership or sole proprietorship. If the 15% rate becomes law, what new tax planning opportunities might be opened up? And what limitations might Congress impose on that ultra-low 15% rate to prevent too much tax revenue leakage?  READ MORE +

3 breaks for business charitable donations you may not know about

Here are three lesser-known income tax breaks for charitable donations by businesses: 1) deduction for donated food that equals the lesser of the food’s basis plus one-half the fair market value in excess of basis or two times the basis, 2) deduction for qualified conservation contributions by qualified C corporation farming and ranching operations of up to 100% of adjusted taxable income, and 3) favorable tax basis rule for shareholders of S corporations that make donations of appreciated property. Think you may be eligible? Contact us to learn more.  READ MORE +

Leaving specific assets to specific heirs is an estate planning no-no

Planning your estate around specific assets can be risky. If you leave specific assets (such as a home, a car or stock) to specific people but dispose of an asset without updating your will, you might inadvertently disinherit someone. Therefore, it’s generally preferable to divide your estate based on dollar values or percentages. If it’s important to you that specific assets go to specific heirs, consider creating a trust that provides for your assets to be divided equally but for your heirs to receive specific assets at fair market value as part of their shares.  READ MORE +

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 +

What’s the Right Structure for Your New Entity?

So you’ve got your great business idea and you’re ready to get started. Or, maybe you’ve gotten started and you want to make it official. You’ve decided you need an entity. But what kind?  READ MORE +