News & Blog

The “Tax Cuts and Jobs Act” that was signed into law in December 2017 was the most significant tax reform legislation in decades. The changes significantly impacted both individuals and businesses in many areas. Once area most affected was estate planning.

Effective estate and trust planning can ensure financial security for loved ones. For businesses, it can maintain a smooth succession of ownership. The estate planning process can be challenging for the average person, without any legal or accounting training, to understand. The best way to make sure your wishes are followed and your belongings or business are passed on to the right people is to hire professional help.

The role of a CPA (Certified Public Accountant) is to help people navigate the complex and shifting tax laws to facilitate the transfer of assets and minimize the tax liability of their beneficiaries. Everyone should have a comprehensive plan as to how to distribute the assets left in one's estate to avoid complications. Having taxes and estate thoroughly and carefully planned will help loved ones avoid dealing with complications during a time of loss.

Estate Planning Changes

The tax reform legislation raised the estate tax exemption to $11.18 million per person, or $23.36 million for a married couple, a significant increase over prior limits. This eliminates any federal estate taxes on amounts under those limits gifted to heirs during your lifetime or left to them upon your death.

The new legislation eliminates the federal estate tax for all but the wealthiest individuals. One caveat is worth noting: as with most of the provisions of the Act, these rules are set to expire at the end of 2025. At that time, the exemption amounts will revert back to previous levels, adjusted for inflation.

The generation-skipping tax (GST) rate exemption also increased to the same amount as above for individuals and married couples. This increase also expires at the end of 2025. Also, the method used to calculate inflation on these exemptions and other related areas has been changed.

The temporary increase in the exemptions for the federal estate tax and the GST means that until the end of 2025 (unless Congress repeals or extends these rules), many will be able to give away more of their estate to their heirs without paying estate taxes. For beneficiaries, the new law has obvious benefits, but its introduction doesn't eliminate the need for estate and tax planning.

With the increased exemption limits, lifetime gifts of estate assets can be made without concern of trigging federal gift and estate taxes, except for those with estates in excess of the exemption amounts. Gifting can also be done with the idea of shifting assets likely to experience high levels of appreciation. This can shield the appreciation of those assets from future estate taxation in your estate once the current exemption limits expire after 2025.

A Strategy to Protect a Spouse

One tactic to consider in some cases is the spousal lifetime access trust (SLAT). The SLAT is an irrevocable trust that removes the assets from an individual’s estate but transfers the assets to an irrevocable trust for the benefit of his or her spouse. The benefit is that those assets are out of the individual’s estate, allowing them to take advantage of the increased estate tax exemption prior to the 2025 deadline, while still retaining a degree of control over those assets via their spouse during their lifetime.

Changes only temporary – act now

Tax reform has resulted in many changes for taxpayers, especially estate planning, but like most of the tax reform legislation, the impact is temporary and will largely revert to the prior rules after 2025.

Those with estates to pass on to the next generation, especially for those with larger estates, should contact an accountant (and attorney) now to review their current estate planning documents to ensure that they still do what they intended for them to do, and to ensure that they are taking full advantage of any opportunities under tax reform.

For more information or to schedule an appointment with one of our CPAs to discuss estate tax planning, contact Byler, Wolfe, Lutsch & Kampfer at 330-332-4646 in Salem or 330-385-2160 in East Liverpool.

As a business owner, you are ultimately held responsible for the financial health of your business. That includes the accuracy of your financial statements. Unless you’re a CPA (certified public accountant) yourself, keeping track of more details than “making a profit” isn’t in your skill set.

So without the expertise or time to fully tend to the financial health of our business, you’d likely consider adding an in-house accountant to the team. But doing so could be expensive for a small business with a limited budget. A cost-effective option to consider is outsourcing the role to a local CPA firm that has the knowledge, experience and tools to make sure that your financial books look the way they should.

CPA firms offer a variety of services to help small businesses with financial reporting requirements. Audits, reviews, and compilations – all different, but useful - can help your business secure a loan, satisfy regulatory rules, or entice new investors. These services can be expensive, so it’s a good idea to understand what each includes so you can determine which one best meets your needs and budget.

Audit

If you need to prove that your financial statements are accurate, an audit is the most comprehensive and well-documented way. During audits, CPAs analyze accounting records and study the documentation for your transactions. After finishing this research, a CPA issues an opinion on whether or not they believe that your financial statements comply with generally accepted accounting principles (GAAP) in all material respects.

An audit is the highest level of assurance you can obtain from a CPA. Because the stakes are high, a CPA spends a lot of time reviewing transactions. Because audits can be so costly, some small businesses don’t get them unless they absolutely have to. Audits are sometimes required by banks in situations where large businesses are seeking large loans or seeking federal grants above a certain amount.

Review

A financial statement review is similar to an audit, but not quite as time consuming or in-depth. When conducting a review, CPAs express limited assurance about your financial statements. Rather than digging through documentation, the CPA performs basic analytical procedures to double-check that the financial statements make sense. The best report you can get from a review is simply that the CPA is not aware of any material departures from GAAP.

If you want a CPA’s stamp of approval on your financials, but aren’t required to get a full-blown audit, a review can be a good option. Because there’s less assurance provided in a review, the CPA spends less time reviewing your books, which costs you less. Reviews can be a helpful tool if you’re trying to attract new investors or are looking for a buyer for your business.

Compilation

During an audit or a review, the client company often prepares the financial statement, although the CPA can prepare them as well, as an additional service. During a compilation, your CPA assists you in preparing the financial statements but doesn’t give an opinion on their quality or accuracy.

The American Institute of CPAs believes that compilations are best suited for very simple accounting situations. For example, a compilation may be appropriate if your business uses the cash method of accounting and needs to translate that to the accrual method. If your company is small and your transactions are straightforward, a lender may accept this in lieu of a financial review for a loan application.

Compilations aren’t very time intensive and are generally much cheaper than audits and reviews. But sometimes, you get what you pay for. Although you’d hope that compiled financial statements comply with GAAP, your accountant has no obligation to ensure that they do. In other words, you’re paying for the right to say that a CPA has helped you put together financial statements.

For more information about which financial statement “check” method best suits your business, contact Byler, Wolfe, Lutsch & Kampfer at 330-332-4646 in Salem or 330-385-2160.

As a business owner, you are ultimately held responsible for the financial health of your business. That includes the accuracy of your financial statements. Unless you’re a CPA (certified public accountant) yourself, keeping track of more details than “making a profit” isn’t in your skill set.

So without the expertise or time to fully tend to the financial health of our business, you’d likely consider adding an in-house accountant to the team. But doing so could be expensive for a small business with a limited budget. A cost-effective option to consider is outsourcing the role to a local CPA firm that has the knowledge, experience and tools to make sure that your financial books look the way they should.

CPA firms offer a variety of services to help small businesses with financial reporting requirements. Audits, reviews, and compilations – all different, but useful - can help your business secure a loan, satisfy regulatory rules, or entice new investors. These services can be expensive, so it’s a good idea to understand what each includes so you can determine which one best meets your needs and budget.

Audit

If you need to prove that your financial statements are accurate, an audit is the most comprehensive and well-documented way. During audits, CPAs analyze accounting records and study the documentation for your transactions. After finishing this research, a CPA issues an opinion on whether or not they believe that your financial statements comply with generally accepted accounting principles (GAAP) in all material respects.

An audit is the highest level of assurance you can obtain from a CPA. Because the stakes are high, a CPA spends a lot of time reviewing transactions. Because audits can be so costly, some small businesses don’t get them unless they absolutely have to. Audits are sometimes required by banks in situations where large businesses are seeking large loans or seeking federal grants above a certain amount.

Review

A financial statement review is similar to an audit, but not quite as time consuming or in-depth. When conducting a review, CPAs express limited assurance about your financial statements. Rather than digging through documentation, the CPA performs basic analytical procedures to double-check that the financial statements make sense. The best report you can get from a review is simply that the CPA is not aware of any material departures from GAAP.

If you want a CPA’s stamp of approval on your financials, but aren’t required to get a full-blown audit, a review can be a good option. Because there’s less assurance provided in a review, the CPA spends less time reviewing your books, which costs you less. Reviews can be a helpful tool if you’re trying to attract new investors or are looking for a buyer for your business.

Compilation

During an audit or a review, the client company often prepares the financial statement, although the CPA can prepare them as well, as an additional service. During a compilation, your CPA assists you in preparing the financial statements but doesn’t give an opinion on their quality or accuracy.

The American Institute of CPAs believes that compilations are best suited for very simple accounting situations. For example, a compilation may be appropriate if your business uses the cash method of accounting and needs to translate that to the accrual method. If your company is small and your transactions are straightforward, a lender may accept this in lieu of a financial review for a loan application.

Compilations aren’t very time intensive and are generally much cheaper than audits and reviews. But sometimes, you get what you pay for. Although you’d hope that compiled financial statements comply with GAAP, your accountant has no obligation to ensure that they do. In other words, you’re paying for the right to say that a CPA has helped you put together financial statements.

For more information about which financial statement “check” method best suits your business, contact Byler, Wolfe, Lutsch & Kampfer at 330-332-4646 in Salem or 330-385-2160.

Even the most successful business owners can’t stick round forever. So after they’ve enjoyed years - maybe decades - of profitability, success, community involvement and the other joys of owning a business, eventually the time will come to step away. Some entrepreneurs choose to close up shop for good. Others would like the sweat equity they invested to mean something for the future. To make sure, they need an exit strategy.

That’s where business succession planning comes in. Organizations use succession planning as a way to ensure that when it’s time to retire or leave the business, the show can still go on. The process includes making sure that they have the right employees in key positions who know how to run the business properly and profitably – managing the staff, inventory, finances, customer service, marketing, human resources, employee communication and other essential functions that make the business successful.

Beyond that, business owners considering selling or passing along their business to a family member or friend, must plan in the most challenging and complicated areas like who will the new owner be, transition timing, transferring business ownership to the next generation or other new leadership.

Accountants should play a critical role in succession planning, but are too often aren’t even in the room when important decisions are being made. The insight of the accountant into the financial strength of the succession plan and the assurance that there are no regulatory issues is essential. Accountants can also provide financial independence and retirement planning for the present leadership while structuring the business for future longevity, stability and success.

For most business owners, their business is their life. Therefore, a succession plan will balance business, family, and tax considerations so they’ll have a succession plan that brings them, their family and business successor’s peace of mind.

As part of the business succession plan, accountants help owners deal with issues like business valuation, liquidity and estate taxes, protecting their assets, minimizing taxes, selling or transferring the business and other financial decisions that affect the owner personally and the business.

Business succession planning isn’t just for older owners. It should be a consideration for all forward-looking owners as a way to plan for unforeseen circumstances. Planning ahead now can ensure the sustainability of the business now and the future.

For more information about business succession planning, contact BWLK in Salem at 330-332-4646 or East Liverpool at 330-385-2160.

If you’re reading this blog, you might be a current or past BWLK client, a friend or acquaintance of one of our partners/employees or someone who found us through Google when looking for an experienced and effective accounting and financial planning firm in Northeast Ohio.

What you may or may not realize is that most CPA firms – including BWLK - are more than one-hit wonders and handle a plethora of financial and accounting services for their personal and business clients. That’s right, you heard it here first – we do more than taxes! What kinds of financial services do we offer? We’re glad you asked.

Starting with this blog – and monthly throughout the rest of 2019 and into 2020 – we will highlight some of the most important services our accountants perform for clients every day. The goal is to educate individuals and business owners about our capabilities and the ways we can make their lives easier. Our work saves our clients time, money, stress, potential mistakes (and consequences), downtime and unnecessary risk.

Payroll services

One way we help the overworked internal accounting departments at small and medium-sized companies is by handling their entire payroll process.

Payroll-related activities include calculating payroll each time period, printing, signing, and distributing paychecks or pay stubs, computer software and program maintenance, training and support, keeping up with changes in tax rates/laws, preparing and remitting payroll taxes and returns to government agencies, W-2s, garnishments, new hire reporting and generating reports for in-house and accountant use.

Outsourcing the payroll process frees up the department’s staff to handle a boatload of other important accounting functions like monthly accounting, payables and receivables, cash flow management, business taxes, budgets, expense reports and more.

Businesses gain several specific benefits and advantages by outsourcing the payroll process. We’ll examine a few below.

Cost reduction

Accurate reporting requires complete and correct employee records. Some companies find it difficult to make this happen without having the appropriate technological resources in-house. Outsourcing payroll to an accounting firm can help these companies improve accuracy and lower operating costs by providing the necessary software to streamline the process.

The direct costs of processing payroll can be greatly reduced by working with a payroll provider. While big businesses can afford to maintain large payroll departments, small and medium-sized businesses don’t usually have that luxury. If your business has fewer than 30 employees, there’s a very good chance you can save money by outsourcing your payroll operations.

Working with a partner with its own system can make the payroll procedure more efficient and help business owners and their employees focus more on core company practices. Knowing that the payroll process is being handled by professionals with the right expertise and tools allows business owners to turn their attention toward improving other elements of the company, including customer service.

Improved government compliance

Obviously, businesses and organizations must follow federal and state payroll and tax regulations to avoid expensive penalties. Most often, these fines occur due to late or incorrect filings or reporting. In addition, these government requirements are always subject to change.

If human resources and payroll employees aren't familiar with codes or aren't able to consistently monitor for alterations, companies could face even more costly fees. Accountants are constantly staying up to date on law and requirement changes to ensure that clients are meeting all obligations as part of their payroll process. Companies trying to handle payroll internally could miss even the most minor law change, which could cost them a lot of money, time and hassle when it comes time to dealing with the IRS.

Enhanced security

Payroll processing is a complex and potentially risky business operation. Even with the most trusted employees, there is always a risk of identity theft, embezzlement of funds, or tampering with company files for personal gain.

Even if you have honest people administering your payroll, there is risk when using in-house payroll software. Is the company’s server secure? Is the firewall good enough? Is employee data safe?

These concerns can keep a business owner awake at night. But most accounting firms have technologies that can spot and alert clients to various types of payroll fraud. They have invested in state-of-the-art systems for storing and protecting data because it’s part of the service provided to clients.

To learn more about BWLK’s payroll services and how your business can benefit, call the Salem office at 330-332-4646 or the East Liverpool office at 330-385-2160.