Whether retirement is decades away or a few years off, the changes you make to your investment plans can have a significant impact on your post-retirement lifestyle. One big question many investors have is about Roth IRAs and traditional IRAs. Specific state and local regulations can also affect your saving strategy, so choose a New York accountant with a thorough understanding of how state laws intersect with your investment strategy. It’s best to seek the input of a qualified financial adviser before making investment decisions, but this quick guide will give you useful suggestions to discuss with your CPA. Continue reading
For the nearly 90 percent of Americans over the age of 65 who collect some or all of their retirement benefits through Social Security, 2017 could be a year of changes. For those who are planning to retire within the next five years, current changes to Social Security could have a lasting impact on their benefits too. While the best guide to maximizing your benefits and protecting your wealth is a knowledgeable CPA who can personalize your retirement planning, reading up can help you know which questions to ask when talking to your accountant or financial planner. Continue reading
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.
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
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.
That’s good news, but it doesn’t tell the whole story about estate planning and tax preparation. Even if your estate is below the threshold, estate planning for your family’s future is still an important part of their financial security. Together, you and your accountant can map out a plan for generational wealth that you can leave as a lasting gift to those who are most important to you.
Wealth management and asset protection are meaningful whether your estate is worth $50,000 or $5 million. Appreciated assets that are exempt from estate, gift, and transfer taxes may still be subject to net investment income tax and, depending on their value, capital gains taxes as well. Traditionally, your CPA might have recommended an estate planning strategy that minimized the value of these assets as they changed hands to heirs due to tax requirements.
Today, estate planning takes an entirely different approach, one that often maximizes the value of assets. The American Taxpayer Relief Act, or ATRA, of 2012 dramatically changed the landscape for estate planners and financial advisors. Now, valuation discounts are predicated on the maximum value of assets, so it’s in your and your financial planner’s best interests to apply top value to appreciated assets.
Estate Planning for Life
Charting a course between earning your greatest valuation discounts while minimizing possible capital gains and net investment income expenditures is your CPA’s goal. Asset transfers designed to protect wealth from federal estate taxes that are no longer assessed could even be counterproductive. While estate planning resources and property transfer options are available online for the do-it-yourself financial planner, these applications can’t provide insight into which choices are best for reducing capital gains tax burdens while recognizing the full value of the estate and its assets.
Planning your estate is about more than what you leave behind; it’s also about how well you live today. The knowledge and expertise of a CPA can also reveal other options for your estate planning needs, including setting up your IRA and managing retirement funds so you can enjoy your wealth today while saving wealth for future generations. With your CPA, services such as revocable living trusts and trustee bank accounts could provide solutions for your specific needs rather than a one-size solution that may not fit all lifestyles.
The key to estate planning that works for you now and ensures security for your family in the future is communication with a financial planner who can develop a plan for you. Even without a significant tax burden from federal inheritance taxes, your estate deserves careful planning and management.
Copyright © 2016 CPA Services. All Rights Reserved.
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.
What’s Changed with R&D Tax Credits
Research and development investments have historically earned businesses tax breaks, but the latest round of changes has increased availability to a wider range of industries and included more tech-based activities. Here’s what’s new:
- The R&D credit has been made a permanent fixture in the tax code; previously, it was provisional and needed regular review along with other extenders.
- The credit’s usefulness has increased as some small businesses can now apply it toward offsetting alternative minimum taxes and FICA tax.
- The scope of R&D programs has expanded to include investments in technology such as website design and software.
What Qualifies for R&D Tax Credits?
To qualify, activities must meet a four-part standard:
- The research, development, or experimental activity must seek to create or improve on a business component. Business components, in this case, include products, processes, formulas, and inventions intended for sale or internal use.
- Businesses must conduct activities designed to reduce uncertainty. Safety testing and reliability/maintainability testing are examples of this standard in action.
- The R&D process must be systematic. Experimental research only qualifies as research if it follows well-defined and documented procedures.
- Research also has to relate to science or technology in some way.
While R&D must meet these four standards to qualify for the credit, the tax code also contains exceptions. Your organization’s CPA can review your specific case, but typically, exclusions include reconfiguring existing business components; duplication or reverse-engineering of existing products or processes; market research and sales data collection; software meant solely for internal use; and research that takes place after commercial production begins.
What Types of Businesses Could Qualify for R&D Credits?
Businesses in science and technology sectors clearly have R&D programs that qualify, but they aren’t the only organizations that benefit. Architectural firms, engineering companies, and tech service providers may also have qualifying programs. Manufacturing companies working on new processes or greening their production facilities could qualify for R&D tax credits to cover feasibility research. If your organization is actively engaged in finding more efficient or effective ways to operate, the new R&D tax credits could apply to you.
To learn whether your organization qualifies or to learn about other tax credits that may benefit you, contact your New York CPA. Services such as eligibility reviews from a professional financial consultant ensure you get all the tax breaks and credits your organization is due.
Copyright © 2016 CPA Services. All Rights Reserved.
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.
Who Is Eligible for Overtime Pay?
Salaried personnel whose incomes fall below the threshold of $47,476 per year will now be eligible for overtime pay at a minimum of one and a half times their regular wage for any hours worked beyond the first 40 in a week. This rule isn’t entirely new; the previous threshold figure was $23,660, and many employees in management positions were exempt. Currently, about 7 percent of salaried workers are eligible for overtime compensation.
Are Some Salaried Workers Exempt?
To achieve eligibility, employees must not only be paid under $23,600 but also pass the “duties test,” a set of job duties that determine which salaried employees are owed overtime pay. Under current laws governing overtime, many managers and supervisors are exempt, but these exemptions are set to change under the FLSA. Some executives, administrators, and personnel in creative positions and sales will become eligible for overtime. For business owners, classifying personnel accurately will be an essential element of compliance and one you should discuss with your business’ accountant.
What Does the FLSA Mean for Small Businesses and Non-Profits?
According to the Notice of Proposed Rulemaking (NPRM) that the Department of Labor published at the end of last year, regarding the FLSA, businesses grossing more than $500,000 annually are not exempt. This figure includes non-profit organizations, but only applies to “activities performed for a business purpose” and not to charitable activities the organization undertakes.
How Can Businesses Prepare for the FLSA?
– The first step in preparing for the coming changes to compensation is an assessment of current salaried workers’ status and job duties. Job titles alone do not determine eligibility; a review of duties within organizations that have salaried employees currently earning below the threshold and working more than a 40-hour week is essential.
– Talk to your company’s CPA to understand the effects of the new law and plan your strategy for compliance. For some companies, the change may necessitate raises for key employees. For others, hiring more personnel to ensure that workers reduce or eliminate overtime could be the answer. Your financial planner can help you create a roadmap for implementation that puts you where you need to be by the December 1 deadline.
– Work with a New York accountant to determine whether the state’s overtime laws take precedence over the federal regulations. According to the Department of Labor, state laws that uphold a “more protective standard than the provisions of the FLSA” are to be followed first. Exemptions according to job duty, gross income, or industry vary between state and federal regulations, and working with a New York CPA who is aware of these points of variance ensures optimal protection for both employees and employers.
Copyright © 2016 CPA Services. All Rights Reserved.
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.
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.
Copyright © 2016 CPA Services. All Rights Reserved.
With the holidays and the start of a new year approaching, it’s natural to start thinking about who’s on your gift list this season. Gifts and charitable contributions given in 2015 can help make your tax burden lighter, which could be an especially important consideration if your year has been a prosperous one. If you’ve given gift or inheritance this year, you need to know whether these assets are taxable.
‘Tis the season to talk to your CPA to learn how gifts affect your tax status and what gifting and donations before year’s end could mean for your 2016 tax return.
Like an inheritance, a gift can count as taxable income. In 2015, the annual exclusion for gifts received is $14,000. In other words, if you make a gift below that amount, you do not need to report the amount on your income tax forms for the year. In the case of a cash gift, figuring the value is straightforward, but for gifts of property, assessing fair market value for tax purposes is vital. Working through a local Long Island CPA firm ensures you won’t face any surprises in 2016.
How are gifts that are more volatile in value such as property or stock estimated for tax purposes? Timing is critical here because the IRS evaluates the gift based on its fair market value at the time it was given. In other words, if you received shares of stock valued at $5,000 in January 2015 and sell them for $10,000 in December, you are responsible for taxes on the $5,000 profit even though the total value of the gift in 2015 did not exceed the $14,000 individual gift limit.
Let’s look at a popular gift for the holidays that will almost certainly exceed the exemption limit: a new car.
That $14,000 2015 limit is not without exceptions, but these are limited to special cases. Some medical expenses, tuition, and other education expenses may be exempt from taxation even if they exceed the cap. In the case of tuition, the gift must be paid directly to the educational institution. If, for example, you were to pay for a semester of college for a child or grandchild, you would need to do so directly to ensure it remained a tax-exempt gift; if the money goes to the student first, it then becomes taxable once it exceeds the individual cap. Similarly, medical expenses can qualify as gifts too, but only if the giver pays the care provider or insurance company directly.
The IRS tracks annual gift-giving because every person has a lifetime exemption amount past which gifts become taxable. Currently, this lifetime limit is $5.43 million per person. If you’re married, you and your spouse can combine to exclude up to $10.86 million from taxes. Gifts of property, businesses, and other highly valuable assets count toward this lifetime sum so the IRS can ensure that owners pay the appropriate taxes on them.
While the IRS takes no notice of the usual cashmere sweaters and colognes that get exchanged as gifts for the holidays, it does require larger gifts to be noted on tax returns. If you have given generous gifts this year, talk to your Long Island accountant to learn more about your tax responsibilities.
Copyright © 2015 CPA Services. All Rights Reserved.
Almost everyone is familiar with paying personal income taxes, but taxes for businesses are unfamiliar territory for most people. Understanding your tax responsibilities and learning what you can do to avoid over-payment is a challenge to handle alone, but with advice from a CPA firm that has experience with helping start-up companies succeed, you ensure your business is financially sound and fully compliant from the outset. A local Long Island accountant can help brick and mortar or online businesses meet their tax obligations.
Know Your Business Type
What kind of business are you establishing? Tax laws treat sole proprietorships, corporations, S-corporations, partnerships, and self-employment as different entities. You will fill out different tax forms for each of them, and your choices here have a significant impact on your tax responsibilities. You will always need to pay an income tax, but self-employment taxes, sales taxes, and payroll taxes may also factor into your tax plan. At this stage, a CPA’s financial advice is invaluable. Choosing a local firm is also wise; a Long Island CPA, for example, can advise you not only on federal tax laws but also state and local tax expectations you must meet. Continue reading