The Biggest Tax Mistakes Businesses Make – And How You Can Avoid Them
Individual tax returns can become complicated enough, but businesses face even greater challenges. For an organization, a small mistake at tax time could spell significant fines and penalties down the line – costs that could limit your company’s growth for years to come. The good news is that most such mistakes are easily avoidable. Here are some of the most common tax mistakes and how to protect your company from making them. Continue reading
Take Charge of Your Company’s Year-End Taxes Today
When it comes to the little things, procrastination has its rewards. Sleeping in an extra few minutes or putting off errands until after your alma mater’s big game can feel good. When talking about your business’ 2017 taxes, though, it’s never too early to start. Every year brings new changes to tax laws, and organizations that prepare to implement next year’s tax strategy early gain a significant chance to make the most of what’s new. With the help of a New York accountant who has already done the necessary homework on local, state, and federal tax law for the coming year, you ensure your company benefits from every deduction and credit you’re owed. Continue reading
How much do you need to save for retirement? What’s the safest plan for your retirement savings today, and will that change as you get closer to retiring? How can small changes now add up to meaningful retirement income in the future? People are right to ask these and other important questions about retirement. It’s easy to think about retirement savings as a future problem, but the solution happens now. Whether you’re founding a start-up, building a family, or building on a lifetime of career successes, this is the right time to think about your long-term financial security. Your CPA is your most valuable financial planning resource, and here are some points to discuss with your accountant. Continue reading
Federal estate tax laws have changed recently, reflecting shifts in how families pass along wealth. The current exemption threshold is indexed for annual inflation, and as of this year, that figure is $5.45 million. This higher threshold means that the great majority – more than 98 percent – of a New York CPA’s clients have estates that are exempt from the national gift and estate tax. Continue reading
Within the administration’s documentation on plans for the coming 2017 fiscal year are provisions that could spell significant tax relief for many organizations. In an effort to stimulate economic growth and reward businesses for investing in research and development, Congress recently expanded the scope and availability of R&D tax credits. While a qualified CPA will give you specific details on how the new legislation affects your business, here’s an overview to show you where your organization may be able to apply these expanded credits. Continue reading
When the Department of Labor finalized the Fair Labor Standards Act (FLSA), employers with salaried workers had good reason to wonder how it might affect them. According to White House policy analysts, an estimated 4.2 million workers’ salaries could now include overtime pay if they put in more than 40 hours a week on the job. An additional 9 million may also become eligible, depending on their duties and the size of the companies for which they work. With such a significant change set to take effect by December 1, employers are gearing up for the change and talking with their Certified Public Accountants now.
Proper wealth management is not just a concern for individuals; it benefits families for generations. With financial advice from a qualified accountant, you’re able to protect the privacy of your assets, provide for your children, and ensure that family members with special needs are cared for by creating a family trust. A trust is a legal entity that lets you control distribution of your financial assets during your life and assure continuity afterward. The first step in setting up a family trust is making an appointment with your Certified Public Accountant. Services also include defining a trustee and beneficiaries for the trust.
Here are some other important facts to know so you can decide if a family trust is right for you.
Why a Trust?
There are many reasons you might choose to set up a trust, but the common denominator in most of them is control. A trust provides continuity of care for minor children or relatives with special needs, ensures responsible spending in adult children, and lets you maintain the privacy of your assets instead of making them a matter of public record. With a trust, there is often no need to go through probate court, which can be time-consuming and expensive.
Although they are often part of sound financial planning for families with significant wealth, trusts can also make sense for other families too. If a family member with special needs has access to government benefits or services, setting up a trust can help maintain those benefits after you are gone. A New York accountant with a thorough understanding of state law as well as federal law can also maintain continuity of care for state services.
Other reasons to set up a trust can include protection of assets from former spouses or creditors, facilitation of charitable donations, inheritance tax management, and easier administration of financial affairs for yourself and your heirs.
Types of Trusts
Trusts typically fall into one of two categories: irrevocable trusts and revocable, or living trusts. An irrevocable trust places some of your wealth outside your estate, sheltering it from inheritance taxes, and cannot readily be amended. As its name suggests, a revocable trust is one that allows the creator of the trust to change the provisions in it. When the creator of the trust is disabled or deceased, this kind of trust reverts to an irrevocable trust.
One specific form of trust merits discussion for families with significant wealth. A generational trust allows you to provide assets to grandchildren directly, and it may be either a living trust or an irrevocable one. This trust lets families avoid double taxation – once when children inherit and again when the wealth passes to the third generation – and can be the cornerstone for building lasting familial wealth.
Do You Need a Family Trust?
Although a trust confers significant benefits, it’s best to talk with a CPA who’s knowledgeable about estate finance and personal wealth management before deciding whether a trust is right for you. Creating a trust does come with associated costs that include attorney’s fees and retitling charges, and although these fees are typically low compared to the value of the trust, they do factor into the decision for some families. Irrevocable trusts are challenging to change once they are put in place, so working with an accountant who understands the process is vital.
Your accountant can guide you through the process of deciding which type of trust might be best for your family and how a trust can fit into your overall wealth management strategy.
In many cases, the divide between business and home life is clear-cut, but what happens when the home is also the place of employment as it is for household workers? Families that also become employers have numerous federal and state labor laws and tax requirements to follow – often more than they know. Few families have extensive experience in the area of household employment, which is why a Long Island accountant who knows federal, state, and local tax law thoroughly is a wise investment.
Hearsay from others who have hired household workers isn’t always accurate. Learn about some of the most common myths about hiring workers in the home and use them as starting points for yourconversationwith your financial advisor or CPA before tax day.
Myth: Families Can Consider Employees as Independent Contractors
According to the IRS, household workers are expressly identified as employees when the household controls the nature of the work. If you govern who works in your home, what they do, when they work, and how the work is performed, you are an employer – which makes your household workers your employees. Classifying household employees correctly is critical to tax compliance. The Department of Labor has also upheld this distinction, noting that economic dependence on employment and the permanence of the work are also factors in how home workers are categorized.
Myth: Salaried Household Workers Do Not Receive Overtime
The Fair Labor Standards Act, or FLSA, requires that all non-exempt workers receive overtime pay for any hours worked over 40 in a standard 7-day week, including household employees. Like employees in an office, they are generally entitled to a minimum of 1.5 times their usual pay rate for overtime hours. These FLSA guidelines become more complex when household workers live within the home. Some live-in caregivers and nannies are exempt workers, while others remain non-exempt; working with an accountant familiar with employment laws can help you make the right decisions here.
Myth: Household Employees Can Appear on the Family Business’ Payroll
Household workers contribute a great deal to a smoothly running home, and that can make a big difference in the workplace indirectly. According to the IRS, however, they are not direct contributors to the company’s success and cannot be placed on a family-owned business’ payroll. They remain employees of the household, not the business. Expenses and dependent-caretax exemptionsrelated to home workers must go on your personal tax return, not your company’s.
Myth: There Is No Rush to Handle Household Employment Taxes
Tax time is invariably busy for your CPA. Services related to household workers take time to sort out, so work with your accountant as soon as possible to ensure that you make all filing deadlines and comply with labor laws. By speaking to your tax professional sooner rather than later, you ensure that your tax process goes smoothly and make tax season easier on your household personnel too.
Myth: Compliance Is Expensive
For some households, the additional layer of complexity that being an employer adds might be daunting enough to reconsider hiring home workers. Your accountant can map out where hiring workers for home employment and complying with federal and state laws can help offset your liability through tax breaks. Setting up a Dependent Care Account saves money for families that have home healthcare needs. Coordinating with your CPA to establish your family’s employer/employee relationship with home workers also lets your household staff get the full complement of benefits to which they are entitled, including Social Security and unemployment insurance.
By blasting the myths surrounding household employment and ensuring compliance on your personal tax return, you and your accountant offer better financial care to the people who help take care of your household.
Few decisions are as critical to an organization’s financial health as choosing the right accountant. It’s more than just a matter of qualifications or cost; a Certified Public Accountant who fits your company’s needs must also be a good fit with your goals. Here’s an overview of what you need to know to find your ideal accountant.
Certified Public Accountants for Business
What Do You Need in a CPA?
What is the first thing you need your accountant to do? The answer will tell you a great deal about what sort of CPA you should work with. Your immediate challenge might be assembling accurate, complete financial statements after a recent merger or acquisition. You might need a forensic accountant to spot and explain anomalies in records.
Perhaps you need someone to handle routine accounting duties such as payroll and general ledger maintenance. Maybe you want a Long Island accountant with extensive knowledge of state and federal tax laws. Your ideal accountant might play a key advisory role, helping your organization grow. All of these and more are good reasons to seek a CPA with a specific skill set.
In-House or Outside Accounting Firm?
In the beginning, many business owners and entrepreneurs handle their own accounting using readily available bookkeeping software tools. Successful enterprises quickly grow beyond that point, and then executives face their first major accounting decision: Should they hire a CPA in-house, or should the company work with an outside accounting firm?
For growing businesses, the expense of a full-time accountant may be too great, especially if the company needs experience with a wide range of skills. Hiring CPA services from an outside firm is a smart choice that puts expertise in a variety of areas at a business owner’s fingertips. Large, established businesses face a different challenge: They can afford an in-house accountant, but the volume and scope of their financial transactions may require additional help at times. Turning tax preparation over to an outside CPA relieves pressure on the in-house staff.
Outside accountants are able to handle every aspect of a company’s finances, including:
– Tax compliance
– Attestation and assurance
– Forensic accounting
– Audit and review
– Budget and forecast preparation
– Analysis and problem-solving
In-house accountants become familiar with a company’s inner workings and are part of the fabric of the organization. They work with outside CPAs during times of flux such as a merger or sale. Businesses often ask inside accountants to manage:
– General ledger
– Accounts payable and receivable
– Treasury and bank reconciliation
– Daily transactions
Qualifications for Your Company’s Accountant
A larger company has more complex financial needs and requires an accountant with a more extensive skill set than a smaller business. When looking for an accountant, consider these qualifications and areas of expertise.
Certification separates accountants from CPAs and CMAs. Accountants may have either an associate’s or a bachelor’s degree and do not need to pass a qualifying exam. A Certified Public Accountant earns a minimum of a four-year degree and must maintain a schedule of ongoing education to retain certification. They must also take and pass a standardized test to meet state certification requirements. Some accountants focus on the needs of businesses and become Certified Management Accountants, or CMAs. Like their CPA counterparts, CMAs graduate from a four-year program and pass an exam to earn certification.
Aside from certification, experience is another key qualification to examine. CPA services for specific industries may be specialized, and accountants who have experience in those industries are particularly valuable. Accountants familiar with wholesale, retail, services, and other specializations help businesses in these sectors succeed.
When working with an accountant from an outside firm, size matters. A sole practitioner may not offer the versatility of a larger firm, whereas the Big Four may cost more than they save a growing business. Ideally, an accounting firm gives clients versatility and Big Four-quality service at a more accessible price. A mid-sized CPA firm that delivers individualized service is a good starting point for most companies.
References and Interview Tips for CPAs
Some of your most promising leads to find the ideal CPA come from colleagues or vendors. Ask associates within your industry about how they fill their accounting needs; they can often point you in the right direction. Professional associations and industry organizations are also useful when starting your search for the right accountant, so ask around at events and meetings.
A CPA is more than a bookkeeper. A business’ accountant deals with sensitive information, so discretion and availability are vital. CPA firms that instill a company-wide
culture of service ensure you and your firm will be treated as priority clients. Look for firms that offer hours that fit your needs and put you in touch with your accountant, not a voice at a call center.
Whether you want routine bookkeeping, knowledgeable tax preparation, or financial guidance through periods of change in your company’s history, the right accountant plays a crucial role in your business’ success.
More than half the nation is single, according to U.S. Census data assembled by CityLab. Among that number, many are seniors; it’s the fastest growing group of single people in the nation. Financial planning as a single senior is just as important as it is for married people, yet most of the do-it-yourself financial advice you find is aimed at couples. Here are some key tips to consider when working with your Certified Public Accountant to make the most of your senior status whether you are divorced, a widow or widower, or have never married.
Widows and Widowers
For those who have lost a spouse, financial planning often includes attention to Social Security benefits. Upon reaching full retirement age, or FRA, surviving spouses who have not remarried before age 60 may be eligible for 100 percent of their partners’ Social Security benefits. These benefits continue to be recalculated to adjust for inflation and may be a better option to claim than your own benefits, particularly if you choose to claim at FRA instead of waiting until age 70 to earn additional benefits by delaying your claim.
Choosing survivor benefits and deferring your own claim can lead to a more comfortable retirement. The specifics of eligibility, when to claim, and which benefits to take can be complex to navigate on your own, however, so it’s best to speak to a CPA with experience in retirement planning who will help you make the right decisions for your financial future.
Financial planning for divorcees brings its own set of challenges depending on your ex-spouse’s financial status, the length of your marriage, and whether your former spouse is still living. You may be able to claim some spousal benefits based on your ex-spouse’s work history. Typically, these benefits amount to no more than 50 percent of the ex-partner’s qualified benefits, and these claims are limited to marriages that lasted at least ten years. As with survivor benefits, making a claim on an ex-partner’s Social Security could allow you to defer your own claim until later in life when your own payments increase to their maximum at age 70.
Those whose former spouses have died may qualify for a full survivor benefit instead of half the spousal benefit. In most cases, this full benefit requires the marriage to have lasted at least ten years, but the law does make some exceptions, such as having a disabled child in the home. Because retirement benefit rules can become quite complicated when divorce and survivor benefits enter the picture, it’s best to speak to a financial advisor and learn about all your options.
Although retirement planning for never-married people is more straightforward when claiming Social Security benefits, single seniors face their own set of challenges. With a single income, maximizing benefits becomes even more important. If you have a partner who is a part of your life and future but not your Social Security status, your CPA can implement a financial plan that includes the people most important to you.