Family Business Succession Tips

This article discusses the sad reality of how fewer than 1/3 of family businesses are successively handed down to the second generation. However, utilizing the tips outlined in this article such as starting your succession planning early, including family members in discussions, training, and sticking to the facts can all set your family business up for success for generations to come. Be sure to check out this link for more details!

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Getting the Most From Selling Your Business

This article discusses how there are many factors at play when a business gets bought or sold. Specifically, topics such as reoccurring revenue, why someone sells, buyers’ interests, evaluation criteria, and the 4 P’s (People, Platform, Processes, and Product) are all outlined within this link. No matter where you are at in the mergers and acquisition process, be sure to check out this link for more information and to be as educated as possible!

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Which Meals Qualify for the Temporary 100% Expense Reduction?

This article discusses how the IRS released guidance explaining deductions on food and beverage within a restaurant. There was a temporary 100% deduction which was “designed to help restaurants, many of which have been hard-hit by the COVID-19 pandemic.” However, as we continue to move forward, there were questions regarding when the 100% deduction and when the 50% limitation applied. Be sure to check out this link for more information and details that are relevant as an employer!

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Creating a Post-COVID Workplace

This article discusses how businesses are starting to return to the workplace following the relaxing of COVID-19 regulations. However, this process may be more difficult than anticipated. This article outlines three steps to consider when implementing your return to work process. For example, determining what this process looks like operationally, prioritizing what employees need, and supporting growth in both work and personal aspects is going to be key these next few months. Be sure to check out this link for more information and details!

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Marketing Your New Startup

This article discusses how many startup firms are having similar problems in marketing and getting their new ideas out there. Whether your startup is 5 years old or 5 days, utilizing tips such as email best practices, social media, blogs, and truly staying authentic can prove beneficial in the long run. Be sure to check out this link for more information and details!

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Tips for Family Business Success

This article acknowledges and discusses how running a family business can be difficult at times. From balancing a family work-life balance to communication issues, this industry can be very challenging. However, by following tips such as actively managing family dynamics, hiring externally when necessary, establishing a structure, and succession planning, your family business can be at the top of its game. Be sure to check out this link for more information and details!

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American Rescue Plan: Advanced Child Tax Credit

The American Rescue Plan Act of 2021 modifies a number of tax provisions, including a third round of direct stimulus payments, enhancements of many personal credits meant to benefit people with lower incomes and children, extensions of highly popular payroll tax credits for employers first instituted at the beginning of the pandemic, and changes related to retirement plan funding. This letter explains the changes to the child tax credit that may affect you.

The American Rescue Plan includes a significant overhaul of the child tax credit, but only for the 2021 tax year. Under current law, the amount of the child tax credit is equal to $2,000 per child, but only $1,000 of that amount is refundable (meaning that the taxpayer receives the credit even if there is an insufficient amount of taxes to be credited against). The American Rescue Plan increases the amount to $3,000 per child (or $3,600 for a child under the age of six) and makes the credit amount fully refundable. The American Rescue Plan also increases the maximum age of qualifying children to include 17-year old children.

The excess of the amount of the credit over the present-law $2,000 amount is phased out by $50 for every $1,000 of modified adjusted gross income in excess of the threshold amount ($150,000 for joint filers, $112,500 for head of household filers, and $75,000 for single filers). Once the excess amount is eliminated, the amount of the credit remains at $2,000 until the present law phaseout thresholds are reached ($400,000 for joint filers, $200,000 for all other filers).

The Treasury and IRS are directed by the American Rescue Plan to issue advance payments of half of the credit amount beginning on July 1, 2021. The advance payments are to be issued monthly, if feasible, or as frequently as possible if monthly payments are not feasible. The remaining half of the credit not paid in advance is received when filing 2021 returns, as the full amount is claimed on the return but reduced by the aggregate amount received in advance. The IRS and the Treasury have announced that the first monthly payment of the new refundable Child Tax Credit (CTC) from the American Rescue Plan will be made on July15. Further, the increased CTC payments will be made on the 15th of each month unless the 15th falls on a weekend or holiday. Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and above.

In the case of a taxpayer who received advance payments in error (for example, where a 2019 or 2020 return indicated a dependent child who is no longer a dependent in 2021), the American Rescue Plan provides a “hold-harmless” provision, protecting taxpayers from having to pay back overpayments of up to $2,000 per child. The full $2,000 amount is ratably reduced for taxpayers with income above a threshold amount ($40,000 for single filers, $50,000 for head of household filers, and $60,000 for joint filers). The $2,000 is completely eliminated for taxpayers with income double the applicable threshold amounts, and the entirety of the overpayment must be paid back.

Congress has directed the IRS and Treasury to create a website for taxpayers to opt out of receiving advance payments, or to provide information on status changes that would impact the amount of the credit.  Taxpayers may elect out of the advance payments and instead claim the full amount of their child tax credits on their 2021 tax returns.

If you have any questions on how the changes to the child tax credit under the American Rescue Plan affect you, please call our office.

IRS resource – Advance Child Tax Credit Payments in 2021 | Internal Revenue Service (irs.gov)

The US Loses Out On $1 Trillion a Year Due to Tax Cheats, IRS Estimates

As part of its oversight role, Congress is constantly assessing the economic health of the United States, so hearing from Internal Revenue Service Commissioner Chuck Rettig that the country may be losing up to $1 trillion a year in evaded taxes is an obvious cause for concern. This estimate is several times the 3-year-cumulative amount of $441 billion that the agency had previously asserted.

In his meeting with the Senate Finance Committee, Rettig said “I think it would not be outlandish to believe that the actual tax gap could approach and possibly exceed $1 trillion per year.” He listed several tax evasion techniques that the agency had not included or even been aware of. Among them were new technologies such as the use of cryptocurrency, as well as more familiar issues such as illegal income, underreporting from pass-through businesses, and offshore tax evasion.

Lawmakers hearing of the disparity between what is collected and what should be collected are vowing to take action. According to Senate Finance Chairman Ron Wyden (Oregon – D), the IRS commissioner’s news should serve as a “wake-up call” to the remarkable revenue losses the government is suffering. He anticipates that his colleagues will take action to facilitate more aggressive tax enforcement, indicating that conversations he has already had with Senator Mike Crapo of Idaho, his committee’s top Republican, indicate bipartisan support. Other senators who have voiced concern include Massachusetts Democratic Senator Elizabeth Warren, who is planning a bill to provide mandatory, steady funding for auditors for the IRS budget; and Ohio Republican Senator Rob Portman, whose focus is on tax-dodging cryptocurrency enthusiasts.

Presidential Action

In addition to congressional action, President Joe Biden has included an extra $900 million in his budget proposal to provide for expanded audits and has included corporate tax enforcement in his $2.25 trillion infrastructure plan. He is also promoting additional individual tax proposals. Responding to questions about what his agency needs to improve enforcement, Commissioner Rettig pointed to 17,000 enforcement-related positions lost over the last ten years and indicated that with $1 billion more in funding, the agency could engage in a multi-year process to update outdated computer systems to flag fraud and tax evasion and hire an additional 4,875 front-line audit personnel. “We want to get there, but we do need your help,” he said. Pointing to the fact that roughly 99% of taxes subject to automatic withholding and reporting are paid while only 45% of those not subject to this oversight are paid, he said that shoring up regulations overseeing tax-return preparers and tax-reporting requirements would close the gap and serve to minimize fraud.

High-Income Individuals and Corporations Hide the Most

According to a recent study, the richest 1% of the American population fails to report or pay taxes on one out of every five dollars that they earn. This evasion is made possible by the fact that income from partnerships, limited liability corporations and other pass-through entities are not automatically withheld in the same way that is done for wage earners. The study’s authors, which include two IRS officials, concluded that eliminating that method of shielding income, as well as offshore structures, would increase the amount of money collected by the IRS by approximately $175 billion each year.

How to Protect Your Data in QuickBooks

After the unprecedented year we’ve just experienced, the last thing you need is to have your accounting data compromised or stolen. It would be impossible to reconstruct your QuickBooks file from scratch, and you can’t afford to have a hacker steal any of your funds.

There are numerous steps you can take to protect yourself from threats, both internal and external. QuickBooks itself offers some safeguards. Strong company policies can also help safeguard against data theft or destruction. And some of your security guidelines should just come from using common sense.

Here’s a look at what you can do.

Keep Your Systems Safe

There are countless ways you can protect your data by maintaining the integrity of the computer that’s running QuickBooks. Some involve the same steps you would take to safeguard all of the applications and information you have stored there. You should have reputable antivirus/anti-malware software installed. Use strong passwords. Keep up with system updates.

Data protection

You can set up automatic updates in QuickBooks to download and install new functionality and bug fixes.

Updates and Backup

QuickBooks’ own updates are critical, too. You can start these manually, but we recommend setting up automatic updates. Open the Help menu and click on Update QuickBooks Desktop. Click the Options tab to access this tool.

Frequent, safely-stored backups are another essential element of overall data security. If your system is compromised by an intruder, you’ll need to be able to restore your most recent QuickBooks file when it’s safe again. Go to File | Back Up Company to set up either a local or an online backup. Use one of these tools at the end of any day you’ve entered anything on QuickBooks. We can help you with backup if you’re not sure how to do it.

Networks and Smartphones

If you have multiple PCs that run on a network, it’s important to maintain that system’s health, too, since an intrusion at one workstation can affect everyone. You can do this by:

  • Discouraging employees from browsing the web excessively and downloading unnecessary software.
  • Encouraging responsible handling of emails (no clicking on unknown attachments, no personal email on work computers, etc.)
  • Installing network monitoring software or hiring a managed IT service that only charges when you need them.

Do your employees have company-issued smartphones? Make sure their security systems are sound. Set policies to protect them. For example, tell employees they should never use them on a public Wi-Fi network or install personal apps on them.

Internal Fraud Possible

No business owners anticipate that their own employees would steal from them. But it happens, and it can do tremendous financial damage. To minimize your chances of being victimized by limiting the access that employees have to sensitive information.

Data proection

You can limit the access permissions each user has in multiple areas.

Go to Company | Set Up Users and Passwords, then click Set Up Users. You should be listed there as the Admin. Click Add User and supply a username and password. If you’re not sure how many users are supported on your license or need to add more, contact us. Click Next and then click the button in front of Selected areas of QuickBooks. Click Next again. On the next several screens, you’ll designate that user’s access in areas including Purchases and Accounts Payable and Checking and Credit Cards. When you come to the end of the wizard, click Finish.

You might consider running a background check when you hire someone who will have access to QuickBooks. It’s become a more common business practice.

QuickBooks provides additional tools that can help track down suspicious activity. You can view the Audit Trail, for one. Go to Reports | Accountant & Taxes | Audit Trail. This report displays a comprehensive list of transactions that have been entered and/or modified. Other reports may be helpful, like Missing Checks, Voided/Deleted Transactions, and Purchases By Vendor.

A Never-Ending Process

It’s so easy to get caught up in the daily work of running your business that you forget to take the steps required to keep your QuickBooks data—and all of your computer hardware and software—safe. We get that.

Further, you might think that you’re an unlikely target because you’re a small business. Hackers count on you thinking that, though the reality is that you don’t have to be a big corporation to be the victim of cybercrime. Whether or not criminals get access to your funds, they can do a lot of damage that will end up costing you more time and money than you might think.

So stay vigilant. Security should be considered whenever you deal with financial transactions – especially where the internet is involved. If we can be of assistance as you set up safeguards and company policies, let us know. As always, we’re available to answer any questions you might have about QuickBooks operations in general.