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Big tax changes coming for 2018: Find out if you’ll benefit

Posted by Gene Byler Posted on May 01 2018

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.

Personal exemptions

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.

Alimony deduction

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.

Accounting Client Impressed with BWLK Customer Service

Posted by Admin Posted on Jan 31 2018

When it comes to making purchases or hiring a company to complete a job, customers and clients seek quality work at a fair price, done in a reasonable amount of time. But perhaps even more importantly, consumers thirst for excellent customer service, which often seems hard to come by.

Whether it’s struggling to reach a live human when calling tech support or getting a rude response to your concern, good customer service is hard to find these days.

Brad Gilson, owner of Brad’s Carpet and Upholstery Cleaning, knows that the success of his business is built on the level of customer service he provides – especially in emergency situations. So when he needed to hire an accountant to handle his business affairs, he sought out a CPA firm known for its excellent customer service.

“The biggest thing I enjoy about my business is satisfying my customers,” said Gilson, whose company specializes in carpet cleaning, and fire and water restoration. “In my business, I get emergency calls from customers who need immediate attention, and I do my best to deliver results quickly.

“Dan [Wolfe] has been handling the accounting for my business for more than 10 years, and he does a fantastic job of customer service. His availability is above and beyond – I can reach him in the office or on his cell phone anytime I need something. I’ve referred him to anyone who has mentioned needing an accountant.”

Dan takes care of business taxes and consulting for both of Brad’s businesses – carpet restoration and property management. When the latter company was launched, Brad called Dan for advice on how to set it up and hired him to handle the accounting.

“He walked me through everything to make sure nothing got missed,” explained Brad. “I can call him anytime for his opinion before making any business decision. He is a great person and really responsive to any need I have. I couldn’t be happier with his work.”

To learn more about Brad's Carpet and Upholstery Cleaning, click here.

New BWLK office manager ready do some heavy lifting

Posted by Admin Posted on Jan 10 2018

In the gym, Samantha Scott is used to doing the heavy lifting.

Now in her new role as office manager in Byler, Wolfe, Lutsch & Kampfer’s Salem location, she’s preparing to help the firm handle the heavy workload during the upcoming tax season.

https://secure.emochila.com/swserve/siteAssets/site6533/images/Sam_Scott_2018.jpgSamantha, who competes alongside her husband as a power lifter, joined the team in Salem in November. Her job responsibilities will include assembling completed tax returns, answering incoming calls, filing, setting up new client appointments, applying payments, and assisting the CPAs with anything they need.

“Everyone here has been really friendly and welcoming,” Samantha said. “It’s a little bit different than the legal industry, but there are similarities. I like that I have my own work space where I can do my own thing and get things done.”

Samantha spent the last five years working in a law office in East Palestine. She has a good deal of experience in the service industry, also spending time in the insurance business. She was born and raised in East Palestine and is a graduate of Crestview High School.

After high school, she attended the University of Akron for a year, then transferred to Kent State Salem for a year. She still wasn’t sure what career field interested her, so she took time off from college to work. Ultimately, she decided to use the working world as her classroom.

One of her job stops was at a tanning salon, which proved to do more than provide a paycheck. While she was there, she met her future husband, who had moved from California to work as a personal trainer at the gym next door. Three years later, they are married and traveling the country competing in power lifting events.

“I met my husband at the gym,” said Samantha. “His dad was originally from Beaver Falls and lives in East Palestine, so that’s how he ended up back here. Power lifting keeps us pretty busy, and we really enjoy it.”

While they’ve competed at events all over the country, they’ve recently narrowed their focus to a special event that is about more than being the strongest or taking home the biggest trophy. Twice a year, they lift in an event called Relentless. These meets serve as fundraisers for children who are terminally ill. Funds raised from the competitions are donated to HopeKids, a non-profit organization founded in 2001.

As members of “Team Hope,” lifters are introduced to a HopeKids children and their families who they will be raising money and lifting in honor of. They are invited to the private Relentless Kickoff Events in Minnesota and Detroit where they will be introduced to their HopeKid honoree and their family.

Competitors are encouraged to stay in contact with their HopeKids family as they focus on training and fundraising. The lifters’ strength will inspire the HopeKid, and hopefully the HopeKids’ strength will inspire the lifter to press on in training and fundraising.

“It means so much more than competing for some trophy that will just sit on a shelf collecting dust,” said Samantha, who dresses up as the Elsa from the movie “Frozen” during the events to make it fun for the HopeKids who attend. “It’s for a great cause.”

Tax Law Changes Will Affect Most Individuals, Businesses

Posted by Gene Byler Posted on Jan 10 2018

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

  • Maintains the same number of tax brackets, but reduces the tax rate for the top bracket from 39.6% to 37%. In addition, the Act adjusts the taxable income ranges for the tax brackets in a manner that reduces the effective tax rate for most taxpayers.
  • Provides a 20% deduction for qualified business income, which is generally income from a partnership, sole proprietorship, S corporation, as well as certain non-capital gain REIT dividends or publicly traded partnership income. Business that provide services in certain fields such as health, law, consulting, financial services and brokerage services are excluded from this preferential treatment.
  • Approximately doubles the standard deduction (for those that do not itemize deductions).
  • Suspends personal exemption deductions (currently, $4,050 each for taxpayer, spouse, and any dependents).
  • Increases the child tax credit to $2,000 (refundable up to $1,400), and provides for a $500 nonrefundable credit for the care of qualifying dependents other than children (for example, parents). 

 

Business Tax Changes 

  • Reduces the corporate tax rate to a flat 21%.
  • Repeals the corporate alternative minimum tax.
  • Allows corporations to expense fully and immediately 100% of the cost of qualified property acquired and placed in service after September 2017 and before January 1, 2023.
  • Increases the Section 179 expense amount from $500,000 to $1 million and the phase-out amount from $2 million to $2.5 million.
  • Disallows deduction for net interest expense in excess of 30% of the business’s adjusted taxable income (a comparable rule would apply to partnerships).  Disallowed losses are carried forward.
  • Provides that tax-free like-kind exchanges will only be available for real property.
  • Creates a 21% excise tax for tax-exempt organizations on the payment of compensation in excess of $1 million (as well as certain parachute payments) if paid to one of the five highest paid employees.
  • Repeals the deduction for entertainment expenses.

 

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). 

Catch BWLK’s commercial at Salem Twin Cinema

Posted by Admin Posted on Dec 11 2017

BWLK has hit the big screen!

To increase the firm’s visibility and support Salem’s local movie theater, BWLK recently agreed to participate in an advertising program coordinated by a company called Before the Movie.

https://secure.emochila.com/swserve/siteAssets/site6533/images/BWLK_movie_video_238x160.jpgSalem Twin Cinema on State Street recently began showing BWLK’s commercial on the big screen prior to movie presentations.

“We have always felt that supporting local businesses is very important,” said Rick Lutsch, one of the firm’s principals and coordinator of the commercial project. 

“It was a creative and unique way to communicate with prospective clients and showcase the capabilities of our firm.”

The commercial is 15 seconds in length and features information about the firm, as well as several photos recently taken as part of BWLK’s website upgrade.

Salem Twin Cinema has been a part of the Salem community since it opened under its original owner in 1972. Previously owned by Geoff and Kim Goll of Salem, it was sold in 2014 to Jock and Natalee Buta. 

The theater was then completely remodeled and upgraded to use digital projectors allowing 3-D movies, surround sound audio equipment, and deluxe seating featuring both reclining and vibrating seats.

You can watch BWLK’s commercial here

BWLK Principal Dan Wolfe Participates in Tax Reform Roundtable

Posted by Admin Posted on Nov 22 2017

https://secure.emochila.com/swserve/siteAssets/site6533/images/Wolfe_3_minutes_238x160.jpgTax reform is complicated. But when you get a group of tax accountants all in one room, the topic seems a little more simplified.

Recently, the Youngstown Business Journal invited some of the Mahoning Valley’s best and brightest tax accountants to participate in a roundtable discussion about the complexities of the state and federal tax codes. 

Our Daniel Wolfe was among those offering his viewpoints. Comments from Dan and the other accountants were featured in the Business Journal’s print and online editions. 

Dan was also featured in the newspaper’s ‘3 Minutes With’ video, which can be viewed here.

Website upgrade highlights firm’s history and focus on customer experience

Posted by Admin Posted on Oct 21 2017

https://secure.emochila.com/swserve/siteAssets/site6533/images/BWLK_1.jpgThroughout its long history, Byler, Wolfe, Lutsch & Kampfer, CPAs has always been willing to change when needed. Whether it was expanding the firm’s tax and business services to better accommodate clients’ needs or adding more staff or locations to serve more business communities, BWLK has maintained an eye toward progress.

Changes in technology

In the past decade, the changes in technology have been incredible across all industries. From cell phones and other mobile devices to the Internet and wireless connections, technology has transformed the way the world does business. Clients and customers have more access to goods and services than ever before. Indeed, it’s possible to get virtually everything one needs to survive – goods, services, information - without even leaving the house.

Recognizing these changes, BWLK has embraced the use of technology to better serve its clients. While we certainly value the good old-fashioned handshake and face-to-face meetings and communication, we also understand that technology has its benefits. These include speed and convenience of business transactions, improved customer service and increased access to information.

Improving your online experience

In 2009, BWLK launched its first website to provide current and prospective clients access to tools and information that would benefit them. Three years later, in 2012, a major website upgrade was completed to further improve clients’ online experience.

We added a news blog and email newsletter in 2015 to better communicate with our client base, prospective clients and the communities we serve. Much of the news in these communications are housed on our website.

Check out the new BWLKcpa.com

Recently, we upgraded our website again, and we think you’ll like what you see. Some of the changes are easy to notice, while others are more subtle. Here’s what website visitors will notice:

Home page feature photos: We’ve replaced the old “generic” photos of strangers with new professional photographs of our own staff and facilities from both the Salem and East Liverpool offices. We feel this better aligns with the local and personal service we provide to our clients.

About Us page staff bios: We’ve updated the information in our staff bios, including adding a few new ones. We believe it’s important for you to get to know us, as we learn about your business and how we can provide solutions for your needs. We added photos to our bios so you can put a face with a name or voice as you work with us.

Firm History page: Just as you are proud of your company’s history, we feel the same way about ours. In order to share that history and experience with you, we created a new History page on our website. It can be accessed under the About Us menu. We had fun looking back to where we’ve been, what we’ve accomplished and we thank our loyal clients for allowing us to serve them for so many years.

We hope you like the improvements we’ve made to our website as we strive to improve our clients’ experience in as many ways possible – both online and offline. Through it all, our goal remains the same as its always been: To help clients maintain financial viability in the present while taking a proactive approach to achieve future goals.

We invite you to explore our new and improved website, and give us a call to discuss how we can support your business. You might be surprised at all our services that could help your business.

Five Questions With ... Alfred Fricano

Posted by Admin Posted on Mar 27 2017

Q. When and why did you decide to go into accounting?

My dad was in the grocery business, next to our home, so I was always around a business. However, when I graduated from high school, I went to school for engineering, which I discovered wasn’t for me.

At age 21, I went into the candy tobacco wholesale business. I had about $80,000 of my dad’s money in salable inventory in 1957. I really didn’t know if I was making a profit or loss, so I went to the local business college to take bookkeeping to find out. Shazam, I had never heard of accounting, so a whole new world opened up for me.

Business was not that profitable. I sold the inventory, paid my dad, went to Youngstown State University to major in accounting and minor in economics. After graduation, I went to work for Arthur Anderson, and found out that I hated auditing.

I then went to work for the IRS auditing tax returns. After 4 ½ years, I recognized the fact that there was a need to help small businesses with their tax compliance. So, I became a CPA and purchased a small tax practice.

Q. What qualities make a good accountant?

It is a given that if you are a CPA, you understand accounting. However, understanding business is different, and knowing how the IRS works gives you insight into complex areas of tax law. This equips you to be able to help clients make tax-saving and sound business decisions. Sometimes, you have to look past the numbers to make a good decision. You need to listen to what is troubling your clients, and be responsive quickly after they call you for help.

Q. What areas of the business do you focus on?

My main focus is on tax planning, tax consulting, tax preparation of individual, corporate trusts and partnership LLC. As a Certified Business Valuation Analyst, I also perform business valuation consulting in business transitioning and estate planning.

Q. What has been the greatest moment in your career?

I can’t recall any greatest moment in my career. I just feel blessed that I am doing what I am doing and able to provide beneficial services to my clients.

Q. What do you do outside the office for fun?

I like to work in my yard growing flowers, golf trap shooting and dancing.

 

 

You’ve Being Audited: Now What?

Posted by Daniel Wolfe Posted on Feb 27 2017

By Daniel Wolfe

https://secure.emochila.com/swserve/siteAssets/site6533/images/image_1460224078113_saved.site.jpgSo you’ve already mailed this year’s tax return and are looking forward to using that large tax refund check to book a nice vacation this summer. You’re watching the mailbox every day with great expectations. Then, the bad news hits.

What you thought was a nice big check is instead a letter from the IRS that you’re being audited. Yes, you’re among the 1 percent they’ve chosen to investigate. Better put that trip on hold – for now.

What is an IRS audit?

An IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.

The more money you make, the bigger the chance is that you’ll get audited. But mostly, the IRS is looking for certain “red flags” on your tax return. For example:

- You made $80,000, but donated $40,000 to charity

-  You wrote off 100% of your vehicle as a business expense

- Large losses appear on your return

- Data submitted to the IRS does not correspond or does not appear on the return you submitted

Regardless of the reason, many fear receiving that IRS audit letter. Will you have to pay back thousands of dollars in taxes? Will you have to pay interest and penalties? Will they audit your past tax returns? Are you going to jail?

Don’t panic. You can get through this by taking a few important steps:

Figure Out What the IRS Wants

A letter from the IRS doesn’t always mean you are being audited. Sometimes the agency is just looking for more information or clarification. You need to determine what part of your tax return is being audited – often, IRS auditors have questions on a portion of the return, not all of it.

Find Your Documentation

Now you know what the IRS is looking for. The next step is to build your case by collecting your documentation. Find as much information as you can.

If you haven’t kept much, you might need to reach out to third parties like your bank, financial planner, the charities you’ve donated to, etc., to see if they have anything in their records that could help you.

Get Professional Help

Don’t contact the IRS on your own, or ignore the letter.

You need professional help. To represent you before the IRS, a return preparer must be a CPA, attorney, or an enrolled agent, which refers to an individual who has passed a comprehensive IRS examination. Unless your preparer possesses one of these credentials, you'll need to find someone else to represent you.

If you’re looking for some guidance on how to respond to an IRS audit letter, call Dan at 330-385-2160 or email him at Dwolfe@bwlkcpa.com..

Part 4: Combining the Benefits of the LLC and the S Corporation

Posted by Alfred Fricano Posted on Jan 31 2017

By Alfred Fricano

In the fourth and final part of this blog series, we’ll explore the benefits of organizing your new business by combining the features of an LLC and an S corporation.

https://secure.emochila.com/swserve/siteAssets/site6533/images/Fricano.site.jpgThere are certainly benefits of establishing your business as an LLC, but then electing to have it treated as an S corporation by the IRS for tax purposes.

Potential benefits

To accomplish this, you'll have to make the special election with the IRS using Form 2553. It's no more difficult than setting up a corporation and then electing S corporation status. But it may have some added benefits, like:

  • From a legal standpoint, your enterprise will be an LLC rather than a corporation. Therefore, you will have the benefit of ease of administration - fewer filings, fewer forms, fewer start-up costs, fewer formal meetings and record keeping requirements.
  • From a tax perspective, your enterprise will be treated as an S corporation. You'll still have the pass-through of income, avoiding double taxation, same as if your LLC was treated as a proprietorship or partnership.
  • Without the administrative hassles of actually being a corporation, you will still benefit from the IRS treating your business as one. To the IRS, your business will exist separate and independent from you, its owner. Therefore, the business entity can pay wages and salaries to you or to other owners. This amount will be subject to FICA tax and other withholding requirements. But then, it can distribute the remaining net earnings to you and the other owners as passive dividend income, not subject to SECA tax.
  • Being treated as an S corporation may provide opportunities for tax planning to minimize the overall tax liability for your business and you as an individual. It may allow your business to take advantage of better tax treatment for certain fringe benefits, too.

Consider the pros and cons

Obviously, you need to carefully consider the pros and cons of different forms of business organization. Be sure to consider how all the aspects - legal, tax and operational - of each organizational form will impact your unique business enterprise.

Setting up an LLC and then electing treatment as an S corporation may just give you the best of both worlds - the ease of administration of the LLC and the tax planning opportunities of the S corporation.

Seeking professional advice from a CPA or tax attorney is always a wise practice when making choices like this that can affect your business for many years to come.

New Partnership Audit Rules Expected to Increase IRS Audits

Posted by Gene Byler Posted on Jan 28 2017

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.

https://secure.emochila.com/swserve/siteAssets/site6533/images/GByler.site.jpgTo 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:

  • Opting out of the new rules
  • Partnership representative
  • Buy/sell issues
  • Allocation of tax responsibility
  • Restrictions on transfers

 

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.

Byler Discusses New Overtime Rules in Youngstown Business Journal

Posted by Admin Posted on Nov 26 2016

Gene Byler was quoted in a recent Youngstown Business Journal news story about the new overtime laws that the U.S. Department of Labor are implementing starting Dec. 1.

In the article, Byler said "managers of fast-food restaurants and department managers at retail stores paid less than $913 a week are the two groups that often work beyond 40 hours and aren’t paid for the extra hours they put in."

He noted that "maybe we’ll see more part-time workers hired.” He suggests that "it’s more likely part-time employees will see their hours increased and more duties reassigned to them."

Read the entire story here.

Five Questions With… Laurie Chaffee

Posted by Admin Posted on Nov 05 2016

What qualities make a good accountant?

I think attention to detail and the ability to communicate with clients, among other things, make for a good accountant. Sometimes, this requires translating technical accounting information or tax issues into terms that can be understood by someone not trained in our field. Being able to bridge that gap helps us give the client the best possible service. 

https://secure.emochila.com/swserve/siteAssets/site6533/images/Laurie_Chaffee.jpgWhat areas of the business do you focus on?

My responsibilities include a little bit (or a lot, during busy season) of everything from individual taxes, to corporation taxes, as well as accounting and QuickBooks consulting. 

When and why did you decide to go into accounting?

When I started college at Youngstown State (graduated summa cum laude), I wasn’t sure what major I wanted to pursue. However, after taking some business courses I found myself becoming interested in accounting. The rest is history.

 

What was the greatest moment in your career?

Passing the CPA exam! The exam, which is given in 4 sections, is considered to be one of the most difficult professional license tests to pass. According to the AICPA, the passage rates for each section so far in 2016 are: Auditing & Attestation – 46.4%, Business Environment & Concepts – 56.6%, Financial Accounting & Reporting – 46.4% and Regulation – 49.4%.)

What do you do outside the office for fun?

In my spare time, I like to spend time with family, enjoy the outdoors and travel. I’ve also served in the community as treasurer of both the Salem Rotary and Salem YMCA, and on the board of the Salem Area Chamber of Commerce.

(Laurie Chaffee is a Certified Public Accountant and works in BWLK’s Salem office. She celebrated her 25th anniversary at the firm in 2015. To reach her with accounting related questions or schedule an appointment, call 330-332-4646.)

Choosing to Organize Your Business as an LLC or S Corp: Part 3

Posted by Alfred Fricano Posted on Nov 05 2016

By Alfred Fricano

Congrats! You’ve started your own business. With any new venture there is usually mountains of paperwork and important business decisions that need to be made.

https://secure.emochila.com/swserve/siteAssets/site6533/images/Fricano.site.jpgThis four-part blog series is focused on one of those decisions: choosing to organize as an LLC, an S Corp or a combination of both. Each has its advantages and pitfalls. If you missed Part 1 and Part 2 you can read them here.

In Part 3, we discuss the pros and cons of operating as an S Corp, including what an S Corp is, its most important features and the benefits of being one.

What is an S Corp?

An S Corporation is a corporation formed by complying with state incorporation statutes that then elects (by submitting Form 2553 to the IRS) to pass corporate income, losses, deductions and credits through to its owners (shareholders) for federal tax purposes.

S corporation owners report the income and losses on their personal tax returns and are assessed tax at their individual income tax rates. Thus, S corporations avoid double taxation on the corporate income.

Limitations on S Corps

Certain limitations are placed on a corporation that seeks treatment as an S corporation. But if these limits don't interfere with your business plans, the S corporation may be a good choice for you. The main S corporation limitations include:

• It must be a U.S. corporation.

• It must have no more than 100 shareholders. However, all members of a family are counted as a single shareholder. Spouses are also counted as a single shareholder.

• Its shareholders can only be individuals, certain trusts, and estates - they may not be partnerships, corporations or non-resident aliens.

• It can have only one class of stock. But, it can have voting and non-voting stock within that single class of stock.

• Certain financial institutions, insurance companies, and domestic international sales corporations are ineligible.

Advantages of S Corps

A key benefit of the S corporation is its ability to minimize overall tax liability for you and your business. Because of its nature as a corporation, only the wages paid to its owner/employees are earned income that is subject to FICA tax (Social Security and Medicare).

Other net earnings that pass-through to the owners are considered dividend income. This means those payments not subject to SECA tax and — provided the shareholder material participates in the business — they are not considered passive income. Thus, an S corporation can do some tax planning that cannot be accomplished in a typical LLC.

How much should you pay yourself?

The ability to split income between compensation and dividends became even more important in 2013 when two new Medicare taxes were imposed on higher-income taxpayers. One was a 0.9 percent surtax on all compensation over $200,000 ($250,000 for married filing jointly).

The other was a new 3.8 percent tax on investment (passive) income if the taxpayer's modified adjusted gross income exceeds $200,000 ($250,000 for married filing jointly). Thus, the ability to split income can aid in reducing exposure to these new taxes.

Of course, the compensation that you pay yourself must be reasonable not too low or too high -if you want the arrangement to stand up to IRS scrutiny.

Reasonable compensation turns on many factors, but can be summed up by a "yes" answer to the question: "Is the compensation what would be expected for an individual with the background and qualifications in other companies of this size in this industry? 

More features of S Corps

In summary, the most important features of the S corporation include:

• Limited liability for owners

• Pass-through of income to owners, avoiding double taxation

• The business exists independent and separate from the owner/shareholders

• Complex administrative operation - more forms and filings required, more formal meetings and record keeping requirements imposed (bylaws, meeting minutes, written resolutions, etc.)

• Profit-sharing restrictions - earnings distributed proportionate to capital contributions of shareholders

• Flexibility in distributing earnings of the corporation by paying wages and salaries to owner/employees and passing-through other net earnings as passive income to owners

Hire a professional accountant

When starting a business, deciding to organize as an S Corp or LLC can have a major impact on your tax responsibilities and liability. It’s not a decision to attempt to make on your own or take lightly. Seeking the counsel of a professional tax accountant can save you money and legal trouble down the road.

In Part 4 of this series, we’ll discuss the advantages and disadvantages of organizing in a way that takes the benefits of both an LLC and an S Corporation. 

Choosing to Organize Your Business as an LLC or S Corp: Part 2

Posted by Alfred Fricano Posted on Sept 01 2016

By Alfred Fricano

You’ve taken the leap and started your own business. You might already have a business name, a product line or list of services and office supplies. But before you put out the “Open” sign, you need to take care of one of the most important things: the paperwork.

https://secure.emochila.com/swserve/siteAssets/site6533/images/image_1460223143063_saved._crop.tight.jpgChoosing to organize your enterprise as an LLC, an S Corp, or a combination of the two will have legal and tax implications. In Part 2 of this four-part blog series, we’ll look at the pros and cons of becoming an LLC.

LLC Offers Limited Liability and Flexibility

An LLC, or a Limited Liability Company, is a business structure authorized by state statutes. It is a structure designed to provide the limited liability features of a corporation along with the tax efficiencies and operational flexibility of a sole-proprietorship or a general partnership.

As a pass-through entity (unless it chooses tax treatment as a corporation), all of an LLC's profits and losses pass through the LLC to its owner(s), known as member(s). As with a proprietorship or partnership, each individual member reports the profits and losses on his or her federal tax return. This avoids the double taxation to which a regular corporation and its owners are subjected.

However, the LLC still provides a limit on the personal liability of its member(s) in much the same way a corporation does. Typically, a member's personal liability is limited to his or her investment in the LLC.

This feature distinguishes the LLC from a sole proprietorship or general partnership, in which each owner is subject to liability for all of the debts of the business.

Features of an LLC

The features of an LLC may make it an excellent choice of structure for your new business enterprise. The following summarizes the most significant features of the LLC:

Serves as a pass-through of income to owners, avoiding double taxation (unless corporate treatment is elected)

Ease of operation - fewer filings, forms, start-up costs, formal meetings and record keeping requirements

Fewer profit-sharing restrictions - earnings distributed as members see fit; not based on percentage of capital contributions

Entire net earnings of LLC passes through to owners in the form of self-employment income subject to 15.3 percent SECA tax (self-employment tax for Social Security and Medicare). 

Tax Classification for LLCs

The IRS does not recognize the LLC as a taxpayer classification for federal tax purposes. Federal tax treatment is separate and distinct from the limited liability provided to members under state law. Whether an LLC is treated for federal tax purposes as a sole proprietorship, a partnership or a corporation, the members are still shielded from liability.

For tax purposes, by default, an LLC with one member is treated as a sole proprietorship. By default, LLCs with more than one member are treated as partnerships. However, an LLC can elect to be treated as an association taxable as a corporation by filing Form 8832, Entity Classification Election.

Once it has elected to be taxed as a corporation, an LLC can file a Form 2553, Election by a Small Business Corporation, to elect tax treatment as an S corporation.

If you’re starting a new business or are interested in more information about how your business can benefit from forming an LLC, contact our office.

In Part 3 of this series, we’ll discuss the advantages and disadvantages of organizing as an S Corporation.

Five Questions With ... Stacey Smith

Posted by Admin Posted on Aug 01 2016

What qualities make a good accountant? 

I didn’t really decide to go into accounting. I first applied at BWLK for a secretarial position and found that I enjoyed accounting and have an aptitude for it. I’ve moved up through the company over the past nearly 16 years, and am a Registered Tax Return Preparer.

https://secure.emochila.com/swserve/siteAssets/site6533/images/Stacey_Smith_072216.jpgWhat areas of the business do you focus on?

I’m active in many areas of the business, including client payroll preparation and compliance, individual and business tax return preparation and review, accounting and workpaper completion, and various general office duties as needed.

When and why did you decide to go into accounting?

I didn’t really decide to go into accounting. I first applied at BWLK for a secretarial position and found that I enjoyed accounting and have an aptitude for it. I’ve moved up through the company over the past nearly 16 years, and am a Registered Tax Return Preparer.

What was the greatest moment in your career?

Passing the Registered Tax Return Preparer test was very exciting for me. It was the culmination of everything I’d studied up to that point.

What do you do outside the office for fun?

I spend time with my boyfriend and my children, Lillian (age 11) and Liam (9). I enjoy music, board games, crocheting, and minor league baseball games.

Blog series: Should your new business be an LLC, S Corp or both?

Posted by Alfred Fricano Posted on July 23 2016

By Alfred Fricano

So, you’re ready to leave the safety and security of your office cubicle and blaze a new trail into entrepreneurship? You have a wonderful vision for a unique new service or special product and are ready to start a small business – congratulations!

https://secure.emochila.com/swserve/siteAssets/site6533/images/image_1460223143063_saved._crop.tight.jpgYou need a business plan

Your passion and vision are a good starting point. Now what you need is a business plan. That’s where things can get complicated. You’re not just a freelancer – you’re a living, breathing business enterprise. How you choose to organize your business will have consequences - legal, liability and tax-related.

This blog will be the first in a four-part series that will help you determine which type of company your new venture should be. Specifically, you’ll learn about the differences between a Limited Liability Company (LLC) and an S Corporation. Each has benefits and shortcomings, which we will discuss. In some cases, your business could have the best of both worlds – we’ll explain how.

The goal of this blog series is to start the conversation by giving you a basic understanding of the options, and offer our assistance in helping you choose the one that’s best for your business.

LLC, S Corp or both?

Business owners, and even attorneys and accountants, can get bogged down in the debate over which is best - the LLC or the S corporation. But it's not necessarily an either/or proposition.

Rather, you can set up an LLC and later elect to have the LLC treated as an S corporation. If your LLC operates an active trade or business, and payroll taxes on the owner or owners are high, you may find that an S corporation is the best choice.

Both organizational forms share the characteristic of "passing-through" their income to the owner(s). Both also provide their owner(s) limited liability protection. But each has some distinguishing features, too. You, as a new business owner, will want to consider the differences as you choose the form for your enterprise.

A few of the main differences include:

·         An LLC is easier to operate and administer.

·         An LLC offers more flexibility in allocating percentage of profits or losses among the owners.

·         Compared to a typical LLC, an S corporation offers more flexibility in paying its earnings to owners as either earned income in the form of salaries and wages or as distributions.

·         An S corporation is easier to deal with for various tax planning purposes.

Before choosing one of these options - or a combination of the two – you should determine which features are most important to you and your business. We’ll help you do that.

Next time: Part 2

In Part 2 next time, we’ll discuss the benefits of an LLC, how it’s structured and things to consider when deciding whether to organize your business in this manner.

Strategies for Responding to the New Overtime Rules

Posted by Gene Byler Posted on July 09 2016

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.

https://secure.emochila.com/swserve/siteAssets/site6533/images/GByler.site.jpgThe 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:

  • Raise your managers’ salaries to keep them exempt
  • Make no changes and simply pay out the overtime to the affected employees
  • Keep non-exempt salaried workers under 40 hours per week
  • Hire additional workers without benefits to cover the overtime previously worked by those managers.

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.

Posted by Admin Posted on Feb 29 2016

4 Ways to Protect Yourself Against Tax Identity Theft

Posted by Alfred Fricano Posted on Feb 29 2016

By Alfred Fricano

If you’ve ever had your wallet stolen or discovered that someone has hacked into your personal information online, you understand how time-consuming and annoying identity theft can be.

https://secure.emochila.com/swserve/siteAssets/site6533/images/image_1460223143063_saved._crop.tight.jpgCanceling your credit cards, putting a hold on any outstanding checks, getting a new Social Security card and jumping through hoops to get the money back that someone spent on your behalf isn’t fun.

While identity theft is a threat year-round, tax-related identity theft is a growing problem this time of year.

What is tax-related identity theft?

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. You may be unaware that this has happened until you file your return and discover that a return has already been filed using your SSN. Or, the IRS may send you a letter saying it has identified a suspicious return using our SSN.

You’d think that if someone was going to put forth so much effort to steal your tax identity that they’d at least have the courtesy to pay your tax bill, right?

Instead, they have eyes for your big tax refund check. Yes, the one you’re counting on to pay for this year’s family vacation or as a nice down payment on a new car.

Protect yourself

Fortunately, there are some simple ways you can prevent the crooks from swiping your money – and identity. Not only will these save you money, but they will also save you months and months of phone calls and headaches while trying to straighten out the mess.

1. Don’t let the IRS owe you a big refund. A big chunk of change each spring sounds great. But why wait to have access to that money? You can reduce the withholdings from your work paychecks so that instead of waiting around for a big check later (the crooks are waiting on it, too), you can have that money now. If you’re not used to that “extra” cash, sock it away in a savings account and pay yourself later.

2. Secure important documents. Store your important papers, like Social Security cards, in a safe and secure location, and don’t discard any documents with your SSN on them. Copies of tax returns should be kept in a locked file cabinet or safe.

Also, resist giving businesses your SSN or other personal information just because they ask for it. Often, it is not required, and giving out this information is risky. 

3. Protect online information. You should protect personal computers by using firewalls and anti-spam or anti-virus software, updating security patches, and regularly changing passwords for Internet accounts with sensitive information, such as online banking sites. Do not make passwords simple enough to guess, like your address, birthday, wedding anniversary, etc.

4. Hire a professional accountant. The IRS is continually looking for better ways to protect taxpayers against tax identity theft. Unfortunately, there are still some who fall for email phishing scams and bogus websites, which attempt to steal their information. Certified Public Accountants (CPAs) are highly trained in tax preparation and have direct access to many important resources through the IRS that can help educate clients about avoiding and dealing with identity theft.

Alfred Fricano can be reached at 330.385.2160.

CPA vs. Tax Shop: You Better Choose Wisely

Posted by Daniel Wolfe Posted on Feb 27 2016

By Daniel Wolfe

The thought of receiving your tax refund check as fast as you can say “1040” sounds pretty enticing. The faster you get the cash, the sooner you can purchase that new smart TV or book this year’s trip to the beach.

This time of year, “tax shops” lure taxpayers with promises of “guaranteed maximum refunds,” $50 gift cards, and accurate results. All this, for the cheapest tax prep fees out there.

But, just like in life, you often get what you pay for. If something sounds too good to be true, it probably is. And, when it comes to messing with the IRS, you can’t afford to cut costs or corners just so you can walk out the tax shop door with a check in your hand.

In order to protect yourself, consider hiring a professional accountant to prepare your return. Certified Public Accountants (CPAs) specialize in business and personal tax preparation, along with other financial services.

Why Choose a CPA?

Here are 3 important reasons to choose a CPA over a tax shop this tax season:

1. Education. CPAs are highly educated. In order to be a CPA, you must have 150 credit hours of college education, equivalent to 5 years of college, have worked in the industry for at least 2 years and pass a very stringent exam (only about 25% of those taking the exam pass it for each time the exam is given). CPAs are required to have annual continuing education courses in order to maintain their licenses.

2. More than just taxes. Having a CPA prepare your tax return establishes a relationship with someone who will be your adviser on other financial matters. CPAs have comprehensive knowledge of financial affairs and can assist in dealings with the bank, mortgage company and business decisions.

3. Protect you against IRS. CPAs are one of three classes of professionals that can represent you in front of the IRS, should you or your business be audited. “Joe” at the tax shop will not be able to protect you against the IRS.

Dan Wolfe is a partner at Byler, Wolfe, Lutsch & Kampfer. He can be reached at 330.385.2160 or DWolfe@bwlkcpa.com.

Grand Ford Appreciates Long Time Relationship with BWLK

Posted by Admin Posted on Jan 06 2016

Cars and calculators.

Those are the two things that have captured Bob Martin’s attention the most during his 40-year professional career.

After spending the first two years of his career crunching numbers on his 10-key as an accountant at an accounting firm in northeast Ohio, the Kent State graduate shifted gears to join the family car business at Grand Ford.

Although he still dabbles in accounting by keeping the books at his car dealership in East Liverpool, Ohio, he had enough business sense to leave the most complicated accounting to the professionals at Byler, Wolfe, Lutsch & Kampfer.

Strong Reputation

“They are a reputable firm and we’ve never had a problem,” said Bob, who hired A.S. Fricano & Co. (the predecessor to BWLK) to do the dealership’s taxes more than 40 years ago. “Al [Fricano] was a friend of my father-in-law, who owned the dealership. They’ve always done a great job for us, so we’ve never had a reason to make a change.”

Shortly after Grand Ford retained the CPA firm to complete its annual business tax return, Dan Wolfe took over the account. Throughout the decades of service, Bob has relied on Dan for more than just the annual tax return. And, as an accountant in his early years, he knows quality work when he sees it.

Knowledgeable and Responsive

“Dan is very knowledgeable and does a great job for us,” said Bob, whose dealership will begin its 42nd year of business in 2016. “Through the years, he’s helped us with a variety of important accounting functions. He helped during our change from a C corporation to an S corporation, and he stepped right in to get us through an audit back in 1991.

“Having the support of a local firm like BWLK, and specifically Dan, gives us peace of mind and allows us to focus on running our business and making our customers happy. We know we can count on Dan whenever we need help with something.”

From Wolfe’s point of view, the Grand Ford account is much more than a typical client relationship. In some ways, he’s received just as much knowledge as he’s given.

“I have enjoyed the relationship - both business and personal - that Bob and I have had over the many years.” Said Wolfe. “I feel that I have learned a great deal from Bob about the automotive industry during our connection.

“I consider Bob Martin to be the consummate business professional, and I rank him at the top of the list for business ethics and consideration of his clients.”

About Grand Ford

Grand Ford, Inc. was started in 1974 by Anthony, Dom and Al Ludovici. Robert Martin joined the business in 1975 as the General Manager.

In 1990, there was a change in ownership with Anthony Ludovici and Robert and Linda Martin buying out the other partners. Robert Martin became President and Dealer Principal at that time. 

Grand Ford is the oldest family owned dealership in the tri-state area.

Does Your Non-Profit Need An Audit? Maybe. Maybe Not.

Posted by Richard Lutsch Posted on Jan 03 2016

By Richard Lutsch

One question we frequently hear from our clients is: Does my non-profit need an audit?

https://secure.emochila.com/swserve/siteAssets/site6533/images/Lutsch_1.test.jpgAn audit is an official examination of an individual's or organization’s financial statements as a whole, typically by an independent Certified Public Accountant, with the purpose of expressing an opinion on those statements. This process is very thorough and time-consuming, and can sometimes be costly for a non-profit with a limited budget.

Our answer depends on the needs of the organization or the requirements of other third parties. If an organization that funds the nonprofit requires that an audit be performed, then we make that recommendation.

However, sometimes we find that the non-profit doesn’t need an audit, but instead can benefit from a service called “agreed upon procedures.” 

What is an agreed upon procedures engagement?

Simply, this is an agreement made in advance between the nonprofit organization, accountant and sometimes another vested third party, that allows the accountant to review and report upon pre-determined financial areas of concern. The procedures are determined at the onset of the engagement, performed and reported on at the conclusion of the engagement.

For instance, the primary item of concern for most nonprofit organizations is cash. In this scenario, the accountant compares a sampling of checks written against invoices and against the endorsement on the back of the check for accuracy. Perhaps the organization is concerned about the collection and use of restricted funds and related deposits into the bank. 

The purpose of this agreed upon procedures engagement would be to determine whether or not the transactions are being processed and recorded in a proper manner. The accountant performing this service does not provide an opinion, but only reports the results of the tests.

There are several reasons why an organization would choose an agreed upon procedures engagement rather than an audit. It offers a considerable savings over the cost of an audit, is narrower in scope, and generally is more focused on the concerns of the organization. 

Before making any decisions about the review of your non-profit’s financial situation, you should consult an accountant who specializes in this area. You may be surprised to learn what can be done to reduce the risk of loss of your nonprofit organization’s assets.

Five Questions With... Rick Lutsch

Posted by Admin Posted on Nov 27 2015

Q. What qualities make a good accountant? 

A. There are the obvious answers like attention to detail, being able to stay current on the ever-changing accounting rules and tax regulations.  Although these are crucial, I don’t think that is what separates accountants as consultants and service providers.

I believe the best way to provide value is to take a genuine interest in clients’ businesses.  You have to examine the clients’ challenges and attempt to equip them with the tools they need to be successful.  Sometimes, clients are not aware of what they need and what we can do to help.  The task is listening to their problem and providing a suitable solution.  

Q. What areas of the business do you focus on?

A. Everyone in our firm is essentially a general practitioner.  However, we have a large enough staff to be able to have some areas of emphasis.  I oversee our accounting and financial reporting services and the quality control system for issuing financial statements that have been compiled and reviewed.

We also perform what are known in the accounting field as “agreed upon procedures.”  For many organizations, especially some not-for-profits, these serve as “cash audits.”  Although these types of services are not truly “audits” in the technical sense, they can provide what the organization needs without the cost of a complete financial statement audit.     

I also complete many of our not-for-profit clients’ federal form 990s to comply with their IRS requirements. In addition, I oversee and perform the monthly accounting and year-end tax returns for individuals, corporations, partnerships and limited liability companies.   

Q. When and why did you decide to go into accounting?

A. I really just fell into it.  In high school, I took a one-half credit accounting class because I was leaning toward pursuing a college degree in business. A funny thing happened - I was hooked. I liked the way the whole accounting process came together. The rest is history.

Q. What has been the greatest moment in your career?

A. I honestly cannot name a particular moment.  I love the feeling of completing a project for the client and knowing that it was valuable to them.  I also take pride when I have worked with a client for a period of time, and they think enough of what I have done for them to call me “just to bounce a question” or get my opinion on a business decision they are considering.  

Q. What do you do outside the office for fun?

A. I am very involved with a local Boy Scout troop. I enjoy golf, camping and backpacking when in my free time. 

BWLK Launches Social Media Program to Communicate with Clients

Posted by Admin Posted on Oct 21 2015

In business and friendship, communication is critical.

In order to deepen relationships with its clients, prospects and friends, BWLK recently launched a new social media program. The firm created BWLK Facebook and LinkedIn pages and began posting information intended to more regularly engage clients and followers.

Posts will educate and inform followers on accounting and business matters, update them on firm news, and highlight how partners and staff are involved in the communities they live and work in.

You can find BWLK’s Facebook page here. Once you find us, Like our page. You can also follow us on LinkedIn. We encourage you to interact with our content by liking, commenting and sharing it with your friends and followers.

Kensington Well Driller Appreciates Responsiveness, Industry Knowledge

Posted by Admin Posted on Aug 20 2015

The Miller family once enjoyed a strong relationship with its accountant, but service declined when his practice was acquired by a larger firm, George Miller recalls.  

Fortunately for the family’s oil & gas business, the Millers found their way to a new accounting firm, Byler Wolfe Lutsch & Kampfer CPAs, Inc. As a result, they’re back to appreciating responsive accounting service and tax counsel.

“They [BWLK] have a full understanding of the oil and gas industry and how to maximize value from a tax and accounting standpoint,” said George, president of the company, William S. Miller Inc. in Kensington. “When we need them, they’re right on the spot.”

About William S. Miller Inc.

The company was established in 1983 by George’s father, William, primarily as a provider of services to companies that drilled oil and gas wells. Eventually, the company began drilling its own wells, and now manages 120 of them, primarily in Columbiana, Stark and Carroll counties but ranging throughout northeastern Ohio.

Miller’s wells reach the Clinton and shallower formations that have produced natural gas in Ohio for decades. The family is not engaged in larger-scale Utica and Marcellus shale drilling, but they do lease some land to deep-well drillers.

William is still part of the management team, now as chairman. Others include George’s brother Dave, vice president, and their sister Jane Todd, secretary-treasurer. 

BWLK was referred to the Millers by the administrator of their company retirement plan. “He saw how frustrated we were” with the accounting firm serving the Millers and he knew BWLK principal Gene Byler, George said.

Looking ahead

One of the best results of the BWLK relationship so far has been the shift of the company from a C corporation to an S corporation, Miller said. BWLK’s Gene Byler worked with the Millers’ lawyer to execute the transaction, which created tax savings and efficiency.

The change made sense because of the variety of assets and revenue streams in the business, including equipment, oil and gas assets and royalty income, George said.

“The transition put us right where we need to be,” he said.

Although revenue in the oil and gas industry suffers when prices are low, the Millers are accustomed to the ups and down of the business.

Moreover, they continue to benefit from the transition they made years ago from primarily servicing drilling companies to drilling and managing their own wells. In pricing downturns, drilling dries up and so does service work.

“But wells still do generate some income,” George pointed out. “You just tighten down the hatch again. The prices will come back.” 

Salem CPA Marks 25 Years With BWLK

Posted by Admin Posted on Aug 20 2015

A Salem native who wanted to work locally has marked her 25-year anniversary with Byler, Wolfe, Lutsch & Kampfer CPAs, Inc.

Laurie Chaffee, a certified public accountant and manager at the Salem office, reached the milestone this Spring.

“I wanted to stay in the local area,” said Laurie, 48, still a Salem resident. “Over the years I have developed good relationships with many of my clients and in the community. We have a good team in our Salem office, and each of us has specialties.”

Among Laurie’s strengths is work with Intuit QuickBooks accounting software. She does most of the firm’s QuickBooks training and consulting.

Her work also includes tax return preparation, accounting and financial statements and business consulting.

“She’s become an instrumental component for all of our client services, including tax, consulting and financial statement preparation,” said firm principal Rick Lutsch.

Laurie graduated summa cum laude from Youngstown State University in 1990 with a bachelor’s of science degree in business administration. She had amassed real-world experience by that point through her work for a professor who had a tax practice.

The offer from BWLK’s predecessor, A.S. Fricano Inc., enabled her to stay in the Salem area.

“I wanted to work in public accounting, and I lived in Salem, so getting an offer from a firm so close to home was great,” she recalled.

Laurie started as a staff accountant, entering data and preparing simple tax returns and payroll reports. She “learned quickly that the neat and tidy exercises they teach with are nothing like the real-world accounting problems, especially when working with small businesses,” she said. 

As QuickBooks became more popular among small businesses, Laurie was “elected” by her colleagues to bone up on it. Her work as a certified QuickBooks consultant now ranges from helping clients complete a new install to answering a few questions to various levels of service in between.

Over her 25 years, she’s become involved in the community. She is now treasurer of the Salem Rotary, where she’s been a member for 18 years, and has served on the organization’s board.

She has also served on the board of the Salem Area Chamber of Commerce and was a treasurer of the Salem YMCA.

Asked what BWLK clients like about the firm, she points to its local roots. In addition, “we are willing to tailor our services to meet the needs of each client,” Laurie said. “We do our best to provide quality services while keeping our fees affordable.”

Journey to Retirement Needs a Roadmap

Posted by Daniel Wolfe Posted on Aug 10 2015

By Daniel D. Wolfe

One of the classic comedy movies of the last 30 years, Vacation, is about to hit the screen again but this time it is the son of Clark Griswald, Rusty, who is taking his family to the mythical Wally World.

Most people found humor in the movie due to the old “been there done that” feeling. Making and preparing for a trip, as in the movie, includes detailed preparations, ups and downs and many unexpected moments.

Like a trip, financial planning is a life-long event that takes us from the early years of adulthood into retirement. While the ups and downs in the movie make us laugh, these same events in reality are not so funny if we are not prepared.

Here are four major elements of a roadmap for this journey called Life.

We are ready to go so what now?

Our family has made several trips to visit the Great Mouse in the South and the journey was easy to start because we began from home. But in the world of finance, most people do not know where home is or the starting point of the trip.

I have always recommended the preparation and maintenance of a personal financial statement. The first part of such a statement lists the things we own,  called our assets, and the value of those items. That would include bank accounts, investment accounts, real estate holdings, retirement accounts, personal autos, cash value of life insurance and anything else of financial value.

The next part of the statement is the listing of what we owe, or liabilities. These may include mortgages, auto loans, student loans, credit card balances and other debts.

The difference between these two items, assets and Lliabilities, is your net worth. It should be our intention to always keep that number positive.

This calculation gives us our starting point for the trip. While on our trip, we should compare the changes in our personal financial statement from time to time to see if our financial resources are increasing.

Do we have a vehicle that can take us where we want to go?

My wife always chuckles when we get ready for a trip. I change the oil, inspect the tires and belts and of course perform the official waxing.

I want to make sure our car can make it to our destination and keep us secure and comfortable along the way. We cannot achieve this without understanding and controlling our vehicle.

Financial planning presents us with the same issue and to help us we will need to prepare a budget. A budget details how we allocate our income to make sure we stay on the roads that will get us to our destination. Think of it a financial GPS.

Budgets can be sophisticated or simple, written in detail or summarized carefully. We all have a tendency to be surprised where our money is going upon examination, but we should not live with those surprises.

Our budget should detail our sources of income, at least monthly, and where our expenditures are going. We should always plan for normal living expenses and savings for anticipated needs.

You can find some simple budgets and many financial tools in our website’s Financial Tools section. Budgets are critical to any financial plan

Did we pay our AAA bill this year?

Flat tires, breakdowns, toll roads, bathroom breaks and other unexpected things can disruptour vacation.

When preparing a financial plan, we need to reduce our risk of encountering the unexpected, like an unplanned (but welcomed) baby, a lost job, a sudden sickness or worse.

Risk-reduction strategies like buying insurance, accumulating extra savings and so forth can inhibit our enjoyment of life. But inadequate risk mitigation can be catastrophic.

Part of our plan should be identifying our risk and determining the best way to protect ourselves while not spending everything we have to do so.

Hey! I forgot to ask, where are we going?

We know where we are starting and we have the roadmap, but where are we going?

In the late 1990s and most of the 2000s, I would jump on my motorcycle with my friend and our adult sons and take a 4-6 daytrip. Our trip plan would be as simple as “Let’s go South,” or “East”… you get the point.

It would be nice if life was so flowing, but it isn’t. We need to define where we are heading because it is not pleasant to accept an unplanned destination that is not in any way, shape or form what we had hoped for.

In planning for retirement, we need to understand what it’s going to take in the form of pension benefits, self-funded retirement plans, investments and Social Security to meet our anticipated cost of living.

Income and expenses are different during retirement. Where we have mortgage payments now, we will have potentially higher medical cost during retirement. Meanwhile, whereas our  current income may include annual pay raises, retirement will likely bring a fixed income. Moreover, the estimated return in our investments may not be what we had hoped for.

Our destination must be defined as much as possible and adjustments to our current living and adjustments to a different, more affordable destination may be required.

I hope and pray that each one of you plan well, live long and enjoy the trip.

Dan Wolfe is a partner at Byler, Wolfe, Lutsch & Kampfer. He can be reached at 330.385.2160 or DWolfe@bwlkcpa.com.

Five Questions With… Dan Wolfe

Posted by Admin Posted on Aug 10 2015

BWLK principal Daniel D. Wolfe at the July 2015 chamber of commerce expo.

Q. What qualities make a good accountant

A. Listening, understanding, intuitiveness. Though some do not, all accountants should have the technical skills to perform their jobs, especially in the areas of their concentration, but there is something above those skills need to make a “good” accountant. I think a good accountant will partner up with clients and become an integral part of the client’s organization. In order to achieve this level, I believe you need listen, understand and be intuitive.  

Q. What areas of the business do you focus on? 

A. My primary area is taxation, but with my background, I find myself frequently working with business management and financial planning. Along with my 20+ years in public accounting, I have 16 years of manufacturing experience as vice president, chief financial officer and human resources director. I also have passed my Series 65 exam that allows me to be a registered investment advisor representative.

Q. Does being a CPA bring community responsibilities?

A. Being a CPA creates a skill set that can be valuable in any size community. I have always felt a responsibility to use my skills to support the community I live and work in. I am the current president of the Southern Columbiana County Regional Chamber of Commerce, trustee of Roberts Wesleyan College and Northeastern Seminary (Rochester, NY), a member of the board of directors at Columbiana County Memorial Park, past chairman of the board of Tri-State Federal Credit Union and past president of Calcutta Rotary. I have held several positions in my local church and the associated district of churches.

Q. When and why did you decide to go into accounting?  

A. I came in through the back door. Going into my senior year of high school, my game plan was to major in music until I became concerned that this would lead to being a high school band director (please, no offense to band directors). While dealing with this dilemma, I happened to speak with a local CPA who asked about my plans and I answered, “I guess major in business,” with no clue what that really meant. He suggested accounting and said, “If you major in accounting, you can get a job and migrate to any other part of business you may like from there.” As simple as that sounds, it made perfect sense to me. So here I am, and I never looked back.

Q. What was the greatest moment in your career?

A. Though strange, I would have to say the entire career so far. I have met so many good and inspiring people, dealt with many interesting business individuals and learned more than I ever dreamed I would. To paraphrase a great attorney and friend of mine, “I am blessed to have had such an adventure, to learn so much and have success on my limited abilities.” 

Seed Supplier Says Accounting Firm Switch Sprouted Better Service

Posted by Admin Posted on June 10 2015

Shortly after buying out a partner last year, Green Valley Seed President Jeff Hum made another big business decision: He changed accounting firms.

Since then, he says, he has been impressed by the upgraded service he enjoys from Byler, Wolfe, Lutsch & Kampfer.

“We worked with a larger firm, but the primary people working on our business were junior people,” said Jeff (pictured). “Now, we have a senior person looking at our taxes line by line and understanding our business better than any of our previous accountants ever did.”

 About Green Valley 

Jeff is now the majority owner of Green Valley Seed, based at 7472 W. Akron-Canfield Road, Canfield, and his son Bryan owns a minority share. Opened in 1966, Green Valley sells and delivers grass seed, as well as fertilizer, hydromulch and erosion control products, throughout Ohio, Pennsylvania and West Virginia.

Much of the reclamation work on pipeline and drilling projects throughout the Utica Shale play has sourced Green Valley products. Last year, the company opened a warehouse in Cadiz, Ohio, to capitalize on that business and wound up posting a record year.

 More support at tax time 

Jeff had been a part-owner of Green Valley since the 1990s and always had significant involvement with its accountants.

When tax time approached, the old firm sent personnel to download business information and review a set of questions. Then they would compile tax returns for a senior partner to review and finalize.

Now, Jeff works directly with Gene Byler, a partner at BWLK and head of its tax division.

“Gene told me up front that he would be the guy doing our taxes, and he goes over things line by line,” Jeff said. “He doesn’t just look at those figures, he’s actually thinking about how they affect our business and what recommendations he can give us to reduce our taxes.

“Most of our accountants in the past never knew our business. But that’s not the case with him … he understands my business a lot more than the other firm ever did.”

 Time-saving advice 

BWLK has also provided fast and good advice about decisions, including recent ones on whether to buy or lease equipment and how to manage a huge receivable.

“I don’t have time to go out and research,” Jeff said. “Gene has a lot of knowledge and deals with a wide array of companies, and his expertise saves me time.”

Jeff heard about BWLK from two business owners he knows who were happy with its service. He said he would recommend the firm to other business owners. 

Five Questions With… Gene Byler

Posted by Admin Posted on June 10 2015

Eugene E. Byler is treasurer at BWLK and heads up its tax division.

Q. What qualities make a good accountant

A. I believe a competent accountant is knowledgeable, detail-oriented and service-oriented, and has a desire to find errors and correct them. Many of my clients become friends, as well. As a colleague of mine recently told me, you can’t become so deeply involved with your clients’ financial issues without it becoming personal for you.

Q. What areas of the business do you focus on? 

A. My primary area of expertise is taxation, but I also spend considerable time consulting businesses on non-tax issues. Although I have a specialty in agricultural taxation, I have prepared a variety of tax returns, with numerous state implications, including trusts and estates and gift tax returns, as well as partnership and corporate tax returns for a large variety of businesses.

I am the firm’s primary consultant for SAGE (formerly Peachtree) software.  I have earned a Certificate in Educational Achievement from the American Institute of Certified Public Accountants (AICPA) for a comprehensive course in tax planning and advising for closely held businesses. I am a member of the AICPA, the Ohio Society of Certified Public Accountants, the National Association of Tax Practitioners and the Salem Kiwanis.  

Q. When and why did you decide to go into accounting?  

A. When I was 5 years old, a friend of mine who was the clerk for Green Township allowed me to assist him with the financial records. He allowed me to pull the handle on the old adding machine he used. (I’m not sure if it was more of a nuisance to him, but it got me interested).  Then in high school, I completed the two-year basic accounting course in just one year. The teacher (Mrs. Mink) suggested that I consider going to college for accounting. 

Due to my early exposure and my desire to attend college, it seemed like a natural idea. During my first quarter at Youngstown State University, I took an accounting course. God and I had a little discussion about where he wanted me to go with my life. I asked Him to allow me to earn an “A” in the course if accounting was the direction I should go in. After earning that grade, there was little doubt in my mind where God wanted me to be, and what I was to do with my life.

Q. What was the greatest moment in your career?

A. That is difficult to pinpoint. I get a “high” every time I help a client with a problem or master a difficult task.  If I had to pick a moment, it probably would be when I became an owner of Byler, Wolfe, Lutsch & Kampfer (formerly A.S. Fricano & Co.) in 1991.

Q. What do you do outside the office for fun? 

A. I enjoy gardening, woodworking and spending time with my wife and children. I am on my son’s Boy Scout troop executive committee, and just became the treasurer of the church we attend.

4 Ways to Make Your Payroll Process Easier

Posted by Denny Kampfer Posted on May 04 2015

By Denny Kampfer

https://secure.emochila.com/swserve/siteAssets/site6533/images/Denny_crop.tight.jpgNo matter what industry your small business is in, managing payroll isn’t always as straight-forward and hassle-free as you might think.

Payroll is a business obligation that involves more than just paying your employees. It includes dealing with employees’ personal information, handling payroll taxes and adhering to government regulations.

Failure to develop sound procedures that are well executed could result in harsh repercussions like missed paychecks and tax penalties that hurt your company’s bottom line and reputation.

Here are four tips to consider that will help streamline your payroll process.

Make sure employees' information is current.

Tax laws change on a regular basis. So do your employees’ circumstances. Stay up to date on the status of your workers. Changes in marital status, family size, annual income or deductions may prompt the need for adjustments to employees’ tax information. Make sure employees inform you of any changes so you can update your payroll system. Keep records of wages and tax payments while they are employed by you. These records may be needed by employees when applying for home loans or other forms of credit.

Pay your employees on time.

This may go without saying, but it’s vital that you pay your employees on time, every time. The most common wage payment schedules are weekly, bi-weekly and monthly. If you don’t pay on time, you might be subject to penalties. Your employees rely on regular wages, so if a paycheck is late or is for a wrong amount, it’s a big deal. One effective way to pay your workers on time is to set up direct salary payments through your bank.

Automate state and federal taxes.

Consider using payroll software that automatically accounts for state and federal taxes for you. This will ensure that the money needed for payroll taxes is applied correctly and prevents a costly mistake if you forget about payroll tax deposits.

There are no penalties with the IRS for depositing your payroll taxes too frequently, however there can be large penalties for depositing late. Also, paying payroll taxes when employees are paid eliminates any temptation to use that money for other business expenses.

Hire a payroll expert.

You probably don’t have the expertise, time or interest to handle payroll effectively. Because it is vitally important that payroll goes smoothly to keep the IRS and employees happy, consider hiring an accounting firm specializing in payroll management to take care of it.

While it may seem like an extra expense, it could save your company money – and hassle – in the long run. It will also free you up to focus on running and growing your business.

For more information on payroll management and other business and accounting matters, contact us at 330-332-4646 in Salem and 330-385-2160 in East Liverpool or online at www.bwlkcpa.com.