When someone says the word “accountant,” they automatically think about taxes.
Ask any accountant and they’ll tell you that personal and business taxes definitely take up most of their time (think 60-70 hours a week) during the first four months of the year, otherwise known in the profession as tax season.
But if you own a business, there are plenty of other reasons to hire a CPA besides just completing your annual taxes. So many reasons, in fact, you should have an accountant you trust in your contact list for when business or financial issues come up.
Here are some common reasons your business might need an accountant:
Writing a business plan
Involving an accountant while you're writing your business plan may allow you to use accounting software to add financial projections and other reports to it. This will help you create a business plan that's realistic, professional and more likely to succeed.
Hiring a professional at this early stage will mean you get the benefit of their financial knowledge and advice right from the start. That could save you time and money compared with hiring one later in the process.
Advice about company’s legal structure
Not all businesses have the same legal structure – there are different types that are determined by a number of factors. Some might be called limited companies, limited liability partnerships or corporations, others could be sole traders or proprietors.
You should carefully consider each type before deciding which one best suits you. For example, you may do business as a sole proprietor, working on a self-employed basis and invoicing under your own name. If this is the case, you might be able to offset some of your living expenses against tax.
However, this also means you could be held personally liable for any business-related obligations. If your business fails to pay a supplier, defaults on a debt or loses a lawsuit, the creditor could legally come after your house or other possessions.
With a limited liability company structure, it's different. An accountant can explain the business structures available and help you choose the one that best suits you.
Help with the finances
Small business accounting can quickly become complex if you do it on your own. If you feel you're losing control of who owes you money and how much, an accountant can help you make sure nothing falls through the cracks.
You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. An accountant can help here by managing your payroll and producing graphs so you can see how the ratio changes over time.
They can help you understand your company's current financial situation at a glance, and help you monitor the pulse of your business and keep track of important things like cash flow.ve to let go, and learn to trust other people to handle some parts of your
Deal with the government
Some business owners are nervous about dealing with the government. This is why so many small business owners hire an accountant when the first tax filing is due.
But they can also help you deal with more than just tax returns. They can help your company interact with the government in other ways:
- Complete and file the required legal and compliance documents for your business
- Keep your company up to date with the latest tax laws
- Prepare annual statements of accounts
- Keep your company's status updated in the government's company register
- Maintain records of directors and other administrative personnel
- Organize and record share/stock allocation, such as when the business is formed, when a business partner leaves or a new partner joins
- Handle your payroll and ensuring that all employees' tax codes and payments are recorded correctly
For more information or to contact one of our CPAs to help with your business, call the Salem office at 330-332-4646 or East Liverpool location at 330-385-2160.
It’s that time of year again – tax time.
If you’re one of the millions expecting a tax refund this year, chances are you’re already thinking about how to spend that chunk of change. Maybe you’re thinking of buying a bigger TV, taking a well-earned vacation or upgrading your smart phone or computer.
All those ideas sound rewarding and exciting. But there are some smarter and more practical (but not quite as fun) ways to use your refund that might put you in a better financial situation and/or help others.
1. Replenish or start your emergency fund. Life happens. The washer breaks. You have to replace your car. Your spouse gets laid off from work. We usually don’t see life’s curveballs coming and when they do, it’s nice to be prepared. Having an emergency fund can help relieve some of the stress when hit with unexpected expenses or hardship.
Ideally, you should have about six months of expenses socked away. But not everyone can afford to do that and still survive day to day. So, consider taking all or some of your tax refund to start an emergency fund. This might be the only time of year you get such a large sum of money, so this is a smart use for it.
Since it wasn’t part of your regular paychecks, you likely didn’t plan on using it to pay monthly bills. So, you won’t even miss the cash. Put it in the bank for emergencies so when a “rain day” comes, you’ll have some money to deal with it.
2. Invest in your future. Depending on your age, retirement might sound far away. Or, it might be knocking loud at your door. Regardless, you know you won’t work forever. When the time comes to stop doing the job you’re doing, you’ll need money to live on for the rest of your days.
A forward-thinking use for your tax refund is to boost your retirement savings, so that the money can continue growing while you’re still earning an income for today. Consider investing the refund in an IRA, Roth IRA or other retirement account. You’ll thank yourself later.
3. Donate. Maybe you’ve always wished you had enough money to be able to donate to important community causes or organizations. Now, you do. Consider using all or part of your refund to a worthy cause, your church or a non-profit organization. Your gift will be appreciated and you’ll feel good about being able to help. Plus, you might be able to write off the donation on your taxes the next year.
So before you go out and blow all of your refund, give some thought to putting it to good use. Consider using part of it for something fun now, then take the rest to invest in your future or the future of others.
Running a household or a business isn’t easy. There are many day-to-day decisions to be made, and tasks to get accomplished to ensure that things run smoothly. Sometimes, these things can’t be done well without a little help.
We don’t cook dinner, repair cars or provide healthcare for our individual and business clients, but they do rely on our expertise to ensure that their finances are in order. The service we provide to our clients allows them to do what they do best – be hands-on with their families or customers without worrying about the complicated world of finance.
Recently, I’ve had a few conversations with clients about why a business or individual would choose to hire a CPA from smaller firm, rather than a larger regional or national firm. The reason they gave was that they liked the fact that our principals (owners) work so closely on their account, instead of passing it off to a “junior accountant” whom the client doesn’t even know.
We take the extra time to get to know our clients’ financial situation, as well as our clients personally. We not only value their business, but also their friendship.
More than just math
A couple came into my office with their tax return that they had completed themselves. They needed my advice on how to respond to an Internal Revenue Service correspondence they had received. They walked out with peace of mind that we helped them resolve the issue and commented: “Now I understand why I should have a Certified Public Accountant prepare my ‘simple return.’”
With constantly changing tax laws, complex business arrangements and complicated home situations, there’s no such thing as a ‘simple tax return’ anymore. Doing taxes is about more than doing correct math. It’s about having the most updated tax law knowledge and helping families and businesses pay the least legal amount of income taxes possible so they’ll be in the best financial shape as they can.
Our accountants continually attend training sessions to increase their knowledge in order to be advocates for our clients when they need us. We can’t properly service our clients without that knowledge.
We act as a controller for a lot of entrepreneurs that do an excellent job at their vocation, but lack the time and or energy to deal with the administrative functions associated with running their business. We have the expertise, including a certified QuickBooks consultant and staff knowledgeable in the application and use of SAGE and DAK Easy software to assist in the accounting function. We assist companies with one employee to as many as 50 or more employees with payroll preparation and related regulatory filing requirements.
Our tax and business clients aren’t just located in Ohio. We are knowledgeable about laws in Ohio, Pennsylvania and West Virginia. Our firm also frequently files tax returns for clients in most of the 50 states. We have even filed international tax returns or tax forms for individuals with international holding and investments.
Any individuals or business owners needing assistance with taxes or other financial services can contact BWLK’s Salem office at 330-332-4646 or East Liverpool office at 330-385-2160.
Now that the 2017 tax season is over for most individuals and businesses, it’s time to turn attention to next year. Especially because the Tax Cuts and Jobs Act of 2017, which is considered to be the largest tax overhaul in 30 years, will have a significant effect on income tax returns next year.
The law will eliminate and change some deductions for the 2018 tax year. That means that when you filed your return just recently, that will be the last time you'll see several deductions on your tax forms, at least until 2025.
Here are a few of the deductions involved that will have the biggest impact on most individuals and businesses:
Standard $6,350 deduction
This might be the biggest piece of good news for you as a taxpayer. The standard deduction will increase starting next tax year. While single taxpayers were only eligible for a $6,350 standard deduction this year, that amount will nearly double in 2018 to $12,000 for individuals.
Married couples will get a standard deduction of $24,000 for 2018, up from $13,000 for 2017. Head of household filers will see a bump in their standard deduction from $9,550 to $18,000 in 2018.
Now for a little bad news. You will lose your $4,050 personal and dependency exemptions. These aren’t technically deductions, but these exemptions allow you (taxpayers) to subtract $4,050 from your taxable income for each dependent you claim.
The increase in the child tax credit my help offset this loss of personal exemptions, but it might not help everyone.
Unlimited state and local tax deductions
Starting in 2018, deductions for state and local taxes – known as SALT deductions – will be capped at $10,000. While this will certainly benefit you if you live in Ohio or Pennsylvania, residents in South Florida, New York and California and other states where people pay high property taxes, will see the biggest boost.
Miscellaneous itemized deductions
Unreimbursed work expenses is just one of several miscellaneous itemized deductions that have been disallowed under the new law. Also gone are the unreimbursed qualified employee education expenses deduction, itemized deductions, include costs related to tax preparation services, investment fees and professional dues.
Deduction for moving expenses
If you relocated for a new job that year, you might have been able to deduct your moving expenses from your 2017 taxes, assuming you met criteria laid out by the IRS. This criteria states you must be moving to a job location at least 50 miles farther from your old house than the distance from your old house to your old job.
However, for 2018, that deduction is eliminated for everyone except armed forces members.
In the past, couples had the option to set up alimony agreements to allow the person making payments to deduct that money from their federal taxes. That won't be an option in 2019. The deduction is being eliminated for any divorce commencing after Dec. 31, 2018.
While some of these tax changes could benefit you, it’s clear that some are disappointing. If you think you’ll get the short end of the stick because of these changes, there is a silver lining - many provisions of the Tax Cuts and Jobs Act will expire in 2025 unless Congress votes to extend them. That means it could just be a matter of time before cost-saving deductions make a comeback.
To find out specifically how these changes (and others), will affect you going forward, speak to your accountant.
When it comes to the federal tax code, about the only thing most individuals and business owners understand is that everyone has to pay taxes. The questions about how much, how often and when, are complicated issues that accountants can help resolve.
Thanks to the recently passed Tax Cuts and Jobs Act, arguably the most significant change to the Internal Revenue Code in decades, the tax code just became a little more simplified for individuals and corporations. The law reduces tax rates for individuals and corporations and repeals many deductions until at least 2025. The changes take effect after December 31, 2017.
The changes include cuts and benefits for both individuals and corporations. Here are a few highlights of the significant changes affecting both individuals and corporations.
Individual Income Tax Changes
Business Tax Changes
To learn specifically how the new tax law will affect your future personal or business taxes, contact a CPA at BWLK’s Salem office (330-332-4646) or East Liverpool location (330-385-2160).
By Gene Byler
As a Certified Public Accountant (CPA), I am required to take continuing education requirements to keep up to date on the newest financial accounting and tax laws. State and federal laws and policies sometimes change often, and to best serve and protect our clients, we must stay current.
To that end, I attended a two-day Ohio Society of CPAs conference in Cleveland. One of the updates I received was related to the new partnership audit rules that became law in November 2015. This is the biggest change affecting partnership taxation since the creation of the Limited Liability Company (LLC).
About the new partnership audit laws
Under prior audit rules, the IRS dealt with each individual partner in the partnership or LLC, which made the task difficult. So difficult that the IRS rarely conducted audits. However with the new law change, the IRS, in most cases, may assess any additional tax or its related penalties and interest against the partnership as a whole, thus eliminating the need to assess each partner.
Since this assessment will be made against the partnership in the year that the audit is concluded, and payment will be made from the partnership assets in that year, the assessment will be the responsibility of the partners in the year the audit is concluded. That’s instead of to those who were partners in the year under audit.
Any income difference will be taxed at the highest individual tax rate (currently 39.6%). Although there are opt-out rules, there is no best solution.
This legislation also introduces the new role of “Partnership Representative” who will act on behalf of the partnership (and therefore the partners) when dealing with the IRS. This authority includes the ability to bind the partnership and the partners in audits and other proceedings, including settlement authority and decisions on procedural issues such as whether to proceed to litigation. These powers are significantly broader than the old Tax Matter Partner (TMP).
How it could affect partnership agreements
All these changes create significant issues that may require amendments to an LLC’s operating agreement. These modifications could include:
Consider a proactive response
These new rules are complex and are still evolving. A discussion with your tax adviser would help you make the best decisions for your partnership on how to best address them. It’s a matter of when, not if, that we will see a significant increase in partnership audits by the IRS. Your business could be next, and we can help you be proactive before it happens.
By Gene Byler
If you’re a business owner, chances are you are well aware of the legislation that will change how employers pay workers for overtime, effective December 1.
The bad news is that your business will probably be affected at some point. The good news is that you have until Dec. 1 to develop a plan that allows your business to meet the new requirements while minimizing the negative financial impact to your bottom line.
New law basics
Let’s take a look at the legislation.
The last major change in the law regarding overtime pay was made in 2004. So you’ve been operating under those old rules for 12 years, unless your company hasn’t been around that long. The new regulations increase the salary threshold needed to qualify for overtime exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year.) and affect 4.2 million workers.
The new law also automatically updates the salary threshold every three years, based on wage growth over time, increasing predictability.
Any business that employs workers with salaries under the new threshold should consider their best course of action or face paying thousands in higher wages. Your company could also be subject to employee lawsuits for failure to comply with the rules. Your business is NOT exempt, no matter how big or small it is.
These regulations may be in response to several recent lawsuits filed by mangers and assistant managers in recent years. Workers at Chipotle, Dollar General, JPMorgan Chase, Bank of America and Wells Fargo have filed lawsuits claiming their overtime hours are not being compensated appropriately. In many cases, the duties of hourly employees are being done by salaried personnel since they don’t get paid the overtime.
What can you do?
There is no one-size-fits-all way for businesses to prepare for the new overtime rules. Employers have a variety of choices, such as:
Business owners need to start planning now in order to determine which response is best suited for their business. That process is best navigated with the assistance of an employment attorney and a professional accounting firm.
An accounting firm can assist you in determining which employees are likely to be affected, help with tracking non-exempt employees’ hours, help you update record keeping procedures, and advise on how to clearly communicate changes to policies and procedures to employees.
If you need help developing a plan to ensure that your business will comply with the new overtime rules, contact a CPA in our Salem or East Liverpool office.