Recent Tax Changes That Will Affect Individual Taxpayers

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) was passed by the US House and the US Senate and signed into law by the President on December 18, 2015.  Some of the provisions in the act are permanent and others are for a limited amount of time.

The following are some of the provisions that may affect you:

Charitable Distributions for IRA’s:

The PATH Act permanently extends the ability of individuals aged 70 ½ to exclude from income up to $100,000 per year of distributions transferred directly to a qualified charitable organization for 2015 and succeeding years.

American Opportunity Tax Credit: 

The Path Act makes the credit permanent.  The credit is increased to $2,500 per year for four years of post-secondary education.  A phase out starts at $80,000 for single taxpayers and $160,000 for married taxpayers.  Taxpayers with income in excess of the phase out amounts have a reduced amount of credit allowable.

Deduction of qualified tuition and related expenses:

The above the line deduction for qualified tuition and fees has been extended through 2016.

Deduction for elementary and secondary school teachers:

The above the line deduction for elementary and secondary school teachers’ classroom expenditures has been permanently extended for years after 2014.  The $250 deduction will be indexed for inflation for years starting in 2016.

Deduction of State and Local general sales taxes:

The election to claim an itemized deduction for state and local general sales tax has been permanently extended for 2015 and subsequent years.

Deduction of State and Local general sales taxes:

The treatment of mortgage insurance premiums as deductible qualified mortgage interest subject to AGI phase-out is extended for 2015 and 2016.

Exclusion of mortgage debt cancellation:

The Act excludes from income cancellation of mortgage debt on principal residence of up to $2,000,000 through 2016.

To discuss these changes and learn how they may affect you, contact LBA Haynes Strand today by clicking the button  below.

Recent Tax Changes That Will Affect Your Business Decisions

There have been two recent changes in tax laws that affect business decisions.  One is the increase in De Minimis Safe Harbor Expensing Threshold in IRS Notice 2015-82 and the other is the Protecting Americans from Tax Hikes Act of 2015 (PATH Act).

De Minimis Safe Harbor Expensing Threshold: 

There was a change in the repair and expensing rules in 2014.  Under those rules many of you signed a policy to expense items that cost under the de minimis safe harbor of $500.  This allowed you to deduct the cost of items under $500 instead of capitalizing and depreciating those items.  The IRS now allows you to change your policy so that you may deduct in 2016 the items costing less than $2,500.  If you did sign a policy under the previous rules, you may want to change your policy to deduct items costing up to $2,500.  This policy should be in writing and signed as soon as possible. 

PATH Act:

The PATH Act was passed by the US House and the US Senate and signed into law by the President on December 18, 2015.  Some of the provisions in the act are permanent and others are for a limited amount of time.  The following are some of the provisions that may affect you.

Code Section 179 Depreciation:

The Code Section 179 expensing was scheduled to revert back to a limit of $25,000 for 2015.   The Path Act permanently sets the expensing limit at $500,000 with a $2,000,000 investment limit for tax years beginning in 2015 and subsequent years.  These amounts will be indexed for inflation for 2016 and subsequent years.

Bonus Depreciation: 

The Path Act extends the bonus depreciation under a phase-down schedule for calendar years 2015 through 2019.  Bonus depreciation is 50% for 2015-2017; 40% in 2018; and 30% in 2019.

Other Tax Credits and deductions:

  • The research and development (R & D) tax credit has been permanently extended with an increase from 14% to 20% of qualified costs.
  • The 100% exclusion allowed for gain on the sale or exchange of qualified small business stock held for more than five years is made permanent.
  • The PATH Act makes permanent the 5 year recognition period for built-in gain following conversions from a C corporation to an S corporation.
  • The Work Opportunity Tax credit is extended through 2019.

These are important updates that could affect your 2016 business year.  If you have any questions, please click the button below to start your conversation with a CPA at LBA Haynes Strand today!

John Bly Named a Board Member of EO’s Global Board

Co-Managing Member John Bly has received HUGE news for the upcoming year. John has been named a Board Member of EO’s Global Board, where he will serve the organization!  This is a special announcement, because only 9 members of the organization are asked to serve 3 year terms to lead the organization through vision and strategy, and John is one of three member leaders who will begin their board term in July 2016. While this is an amazing accomplishment for John, it is something that didn’t just happen overnight.  John has been a member and advocate of EO since June of 2008 and has served in a number of roles to further EO’s vision, including: President of the Charlotte Chapter of EO, Chair for the highly successful regional NERVE 2013 Conference, Area Director for the US East Region, Member of the Standing Finance Committee for EO Global, and an EO Accelerator Facilitator.

What is EO, you may ask…

The Entrepreneurs’ Organization, better known as EO, is a collection of like-minded entrepreneurs focused on business growth, personal development and community engagement.  The network is made up of nearly 11,000 individual members across the world!

EO Global’s vision is to grow the world’s most influential community of entrepreneurs.  They accomplish their goals by offering chapter development, learning opportunities, forums, and strategic engagement opportunities to members.  There are currently 144 EO Chapters worldwide in 48 different countries.  This organization truly offers once in a lifetime opportunities to entrepreneurs across the globe.  This is certainly a once in a lifetime experience for John as he will be able to work with entrepreneurs across the globe and will have the ability to visit some very special places!

To get involved with the Entrepreneurs’ Organization or to learn more, visit: www.eonetwork.org or email info@eonetwork.org.

Creating A Strategic Plan For 2016

As the year end approaches, now is the perfect time to think about your strategic plans and growth strategies for 2016.  Your growth strategies and strategic plan should be focused on the upcoming year as well as three to five years down the road.  You have to understand exactly where your business is and have a vision of where you want your company to be in the future.  If you don’t have a plan that looks toward the future, you risk not ever growing your business.

One of the most important places to start is to build a budget.  As you are building your budget for 2016, and for your long term (3-5 year) strategy – think about the following questions:

  • Where do you want to be?
  • What size do you want to be?
  • Do you want to sell your company?

All of these questions should be asked on a yearly basis as you look three to five years into the future.  The answers to these questions will determine the day to day operational decisions you make.  If you are going to sell your company in two years, then maximizing current profitability is key – in order to show potential of the business.  If you are going to sell in 5 years and you need to grow significantly, then you may consider doing an acquisition.

Another item to think about is if you have the resources who can help you effectively sell your business or help you complete an acquisition?  Do you know how to set your company up to maximize the value you receive through a sale?  Teaming with a certified public accountant can help you with this. CPAs are notorious for having a wealth of resources and contacts that can help you build a network of advisors.  Whether it be an attorney, a wealth management advisor, a capital advisor, a bank, or SBA lender – CPAs can put you in touch with the right people.

Creating a strategic plan is essential to your business.  It is something that can help you identify the best opportunities for growth, understand potential financial results, and provide you with a detailed and focused plan that you can communicate to your team.

If you would like to learn more about how LBA Haynes Strand can help you achieve your long term goals, click the button below for a no-cost consultation!

3 Tips For Successful Tax Planning

Tax planning can be the single most important thing you do for your financial stability when entering into a new year. The tax planning process is an intricate one that involves gathering information, organizing numbers and data, creating a comprehensive financial picture and charting the best course forward.

With tax season almost among us, take a look at the tips below. Use these tips as a guideline to help protect your financial interests and ensure a smooth, successful tax year.

Tip #1: Know The Basics

Before you begin your tax planning process, there are a few things to keep in mind. These may seem like no-brainers, but you’d be surprised at the number of people who sometimes overlook the obvious!

  • Your income – a key determinant of the tax rate you are facing
  • Your location – tax laws and guidelines differ from state to state
  • Your expenditures – how much are you spending and where?
  • Keeping a budget can help tremendously with this!
Tip #2: Work Closely With a CPA Firm

Maintaining a close relationship with your CPA is vital! Your CPA is there to help find approaches that work best for YOU. Some techniques are better suited for businesses, while others align better with educational institutions or nonprofits. Your accountant can help you identify specific financial areas that incur higher tax rates and form preventative strategies to avoid possible tax increases. With a professional accounting service, you lower the risk of making mistakes. Remember to communicate with your firm all year long, not just right before tax season.

Quarterly financial updates – Think about sending your CPA firm financial updates on a quarterly basis. When they evaluate your numbers regularly, your firm develops more accurate tax saving estimates.

Best practices – Inform your firm of all business decisions you’ve made throughout the year. If your CPA firm has all the correct information, they are able to provide you with the very best advice for the upcoming year.

Regulation changes – Tax laws change every year, sometimes several times within a year. Tax laws shouldn’t be a huge concern when filling out your tax forms, but they should be one of the first things you research before starting a new tax year. Your CPA can help keep you up-to-date with all regulation changes in order to better your financial plan.

Tip #3: Don’t Forget Retirement Plans

Everyone loves a tax decrease, but most folks overlook the fact that a retirement plan can be used as a tax-savings vehicle. Although your income is reduced when you contribute to your retirement plan, your taxes are reduced as well. Working with your CPA and wealth management advisor is a key factor in ensuring that you have the best plan in place. Don’t have a wealth management advisor? Don’t worry – your CPA can point you in the right direction.

Depending on your current standing with these factors, there are several tax planning strategies you and your CPA Firm might want to consider.

Standard and itemized deductions – You may want to consider itemizing your deductions if you pay a significantly high mortgage on an owned home.

Contribute funds to your retirement plan – The more money you make, the more taxes you pay. And the less money you make, the less taxes you pay. One of the best ways to lower your taxes is to decrease your income by contributing to your retirement plan. Your contribution reduces your income, which lowers your tax bill.

Want to learn more about securing tax-planning success? Contact us to start the conversation about your financial future with our firm – accountants who truly care about becoming a partner in your success.

Medicare and You – Things You Need To Know If You’re Turning 65

If you are turning age 65 soon, there are several things you should know about Medicare. You need to know if and when you should apply for Medicare and what your options are when you sign up for Medicare. You can find more information on the Medicare website at www.medicare.gov.   

When to sign up for Medicare coverage:

The initial enrollment period for all Medicare plans is the seven calendar month period starting three months before the month you turn 65.  If you sign up during the first three months of the enrollment period, Medicare will be effective on the first day of the month you turn 65.  If you enroll during the last four months, Medicare Part B will be effective one to three months following the month of enrollment.  There is a late enrollment penalty if you do not enroll in Medicare during the enrollment period.  This penalty is in the form of additional premium when you do enroll.

If you are age 65 and are covered under a group health plan from your or your spouse’s current employment, you may enroll in Medicare Part B at any time while covered.  You may also defer enrolling in Medicare Part B without paying a penalty.  If you defer enrolling, you have eight months after the earlier of the month employment ends or the group health coverage ends to enroll in Medicare Part B.  COBRA and retiree health coverage do not count as current employer coverage.

**You may switch plans each subsequent year from October 15 to December 7. 

Types of Medicare Plans:

Original: 

Original Medicare is comprised of Part A and Part B.  Medicare Part A is hospital insurance and covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.  There are no premiums for Part A.  Medicare Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services.  Premiums for Part B are due monthly and vary according to your income and when you sign up for Medicare.  If you are receiving Social Security benefits, you will automatically get Part A and Part B starting the first day of the month you turn 65 and premiums will be deducted from your benefit payments.  If you are not already receiving Social Security benefits, you need to sign up for Part A and Part B during the enrollment period.  You may sign up online at www.medicare.gov or at the local Social Security Administration office.  You will be billed for the Part B premiums. 

Part D: 

Medicare Part D is prescription drug coverage.  Parts A and B do not cover prescription drugs.  If you want prescription drug coverage, you can enroll in Medicare Part D online at www.medicare.gov. This website can give you the plans available to you in your geographical area and the premium costs of the various plans if you enter the prescriptions you are currently taking.  The premiums vary among different companies depending on your prescriptions. 

Advantage Plan (Part C):

A Medicare Advantage Plan, also known as Medicare Part C, is a plan that includes both Part A and Part B.  It may also include Part D if you want to and may include other benefits.  This is like an HMO or PPO.  Private insurance companies approved by Medicare provide the coverage.   In most plans, you need to use plan doctors, hospitals and other providers or you pay more or all of the costs.  You cannot have a Medigap policy if you are enrolled in a Medicare Advantage Plan and you may be limited in your ability to switch from a Medicare Advantage Plan to other plans.

Supplement Insurance (Medigap) policies:

You must be enrolled in Medicare Part A and Part B.  Medigap policies are sold by private companies and help pay for costs not covered by Original Medicare, such as co-payments and deductibles.  It may cover other services not covered by Original Medicare, such as medical care when you travel outside the US.  You must pay the private insurance a monthly premium in addition to the Part B premium.  A Medigap policy only covers one person so both you and your spouse need your own separate plan.  Some companies may offer a discount on premiums if both spouses have policies through their company.  Medigap policies do not cover long-term care, vision or dental care, hearing aids, eyeglasses or private-duty nursing.  There are many types of Medigap plans and you will need to compare coverages and out of pocket costs before you enroll in one.

It may be helpful to enlist the aid of a professional or an investment counselor to help you determine the best fit for your particular situation. LBA Haynes Strand can help – set up your no-cost consultation.

Important Tax Alert: How The 2015 Budget Act Will Affect Medicare and Social Security

The effect of the 2015 Budget Act will impact Medicare premiums and Social Security benefits.  Based on our reading of the bill and various other articles analyzing the new law, the following is an understanding of the changes in the 2015 Budget Act impacting Social Security Benefits:

Medicare Part B Premiums for 2016

The 2016 Medicare Part B premiums were originally scheduled to increase by 52% over the 2015 monthly amount of $104.90 for single taxpayers with income of $85,000 or less and married taxpayers with income of $170,000 or less.  Taxpayers with income above those amounts paid higher premiums. 

NEW LAW: The Act limits the 2016 premiums to the 2015 amounts for most taxpayers.  Taxpayers with higher incomes will pay the 2015 premiums plus $3 per month.  For 2017 and subsequent years, the premiums for the lower income taxpayers will be increased by the lesser of $3 or the cost of living adjustments in their monthly Social Security payments.

Social Security Benefits

Individuals who are or will be age 66 before May 1, 2016:

Under prior rules, individuals who turned age 66 could file for social security benefits and immediately suspend receipt of those benefits.  Their retirement benefits would continue to grow by 8% per year until the earlier of age 70 or an election to start receiving benefits.  While  benefits are suspended, their spouse or dependent child(ren) could receive up to 50% of their normal payment amount.  When the individual later begins  drawing payments, the individual could request a lump sum payment of the accumulated suspended payments in lieu of receiving the increased monthly payments.

NEW LAW: The 2015 Budget Act provides that anyone, who has already filed for and suspended the receipt of benefits prior to passage of the Act and whose family is receiving benefits, will not be affected. 

Individuals turning age 66 before May 1, 2016 can follow the old rule that allows them to file and suspend while their future benefits increase by 8% per year until age 70.  Their dependent child(ren) will be eligible to receive benefits and their spouse aged 62 or older as of December 31, 2015 will be able to receive spousal benefits at age 66. 

Individuals that will turn age 66 before May 1, 2016 but do not file for benefits before that date may file and suspend their benefits after April 30, 2016, but their family will not be able to collect any benefits while their benefits are suspended.   In other words, if the individual turning age 66 is not receiving cash payments, spouses and dependent children may not receive payments unless the individual turned age 66 before May 1, 2016 and filed for benefits. 

Individuals who will be age 62 before December 31, 2015:

Under the old rules, an individual born in 1943 through 1954 could file for full Social Security benefits at age 66 regardless of employment status or earnings.   Generally, spouses age 62 or older and certain dependent children could also get benefits of up to 50% of the individual’s benefit amounts, even if suspended.

NEW LAW: The Act limits the spousal benefits to the greater of the spouse’s own benefits or 50% of the primary beneficiary’s benefits when the spouse reaches age 66.  Spousal benefits and dependent benefits are only paid when the primary beneficiary has filed for benefits and is receiving benefits. 

There is an exception  for a spouse who is age 62 as of December 31, 2015.  If the primary beneficiary attained full retirement age before May 1, 2016 and has either claimed Social Security benefits or has filed and suspended their benefits prior to May 1, 2016, the spouse may claim either spousal benefits or their own benefits when he or she turns 66.  This allows the spouse to collect 50% of the primary beneficiary’s full retirement amount for up to four years and their benefit will increase by 8% until age 70 when they must switch to their own retirement benefits. 

The other exception is for surviving spouses who may continue to choose their own benefits or the spousal benefits.

Individuals under age 62 at December 31, 2015:

NEW LAW: Anyone who turns 62 after December 31, 2015 will lose the right to claim spousal benefits.  If they are entitled to both their own retirement benefit and a spousal benefit, they will only receive the higher amount.  The only exception is for surviving spouses.  A surviving spouse may choose the spousal benefit first while his or her benefit continues to increase by 8% per year until age 70 at which time the surviving spouse can claim his or her own benefit.

Due to the complexity of the rules for electing Social Security Benefits, we encourage you to consult your tax advisor.  The tax professionals at LBA Haynes Strand, PLLC are available to assist you in understanding this process, and making the best possible decision.  Click the button below if you would like to schedule an appointment to discuss your Social Security Benefits, or other important tax planning for your retirement years.

Results of the Contractor Remittance Survey

A CPA Firm should not just strive to be your accountant, but strive to be an industry resource to you. Your CPA Firm should be active in local trade organizations and in local chambers, to keep you up to speed with recent changes that may affect your business.   As a firm that includes a large number of construction related clients, we are members of the Construction Financial Management Association (CFMA) and have access to The Institute of Certified Construction Industry Financial Professionals (ICCIFP).  We do this to be active in the local construction community, as well as to represent our clients.

As a member, we receive valuable information, in many different forms, that we can then communicate to our clients and prospects.

The ICCIFP, has released the results or their “Remittance Survey.”  The survey was posted on September 28th, 2015 on the CFMA Bottom Lines newsletter.  The survey reached approximately 7000 members and was emailed to 950 CCIFPs.  The survey was closed on October 14th with 165 respondents.  Since the sample was targeted at CFMA membership and CCIFPs, the results are skewed towards larger contractors. Questions included in the survey were:

  • On average, how long does it take your company to remit payment to subcontractors?
  • How does your current remittance time to subcontractors compare to last year?
  • How does your current remittance time to subcontractors compare to three years ago?
  • On average, how long does it take your company to remit payment to suppliers/vendors?
  • How does your current remittance time to suppliers/vendors compare to last year?
  • How does your current remittance time to suppliers/vendors compare to three years ago?
  • Of all remittance transactions you made during the last year, what percent were checks, what percent were ACH/wire, and what percent were credit card?
  • When considering your total remittances for the last year, what percent were checks, what percent were ACH/wire, and what percent were via credit card?

To see the results of the survey: CLICK HERE!

Charlotte Business Journal Fast 50 List Revealed

The Charlotte Business Journal has released their Fast 50 list for 2015. This list honors the 50 fastest growing private companies in the Charlotte region. LBA Haynes Strand is honored to have made the list for the second year in a row and continues to make firm growth a priority.

We are excited to once again join this exceptional list of Charlotte companies. Our approach to being a growth-oriented CPA Firm has led us to opportunities to grow through mergers and acquisitions as well as organically. In 2004, the LBA Haynes Strand’s Matthews office was started by John Bly and his wife Darci. The firm was known as Bly & Bly at the time. Over the next eleven years, the firm grew through a series of eleven mergers and acquisitions, including our most recent merger in 2014. These mergers have allowed the firm to grow from $0 to $8 million in revenue in a relatively short period of time and has provided the opportunity to grow our footprint in Charlotte and across North Carolina. With offices now in Matthews, Mount Airy, and Greensboro – we have become a regional CPA Firm.

Our geographical footprint isn’t the only thing that has been changed as a result of our growth strategy. We have also seen growth in our suite of service offerings that we are able to offer to clients. In the Triad we now have a large employee benefit plan audit practice, in Matthews we have a Capital Advisory arm of the firm, and overall we have grown our Sarbanes Oxley, Construction, Manufacturing, and Non-Profit Niches with the experience of key employees and the leadership of our Partner Group.

Thank you to the Charlotte Business Journal for including LBA Haynes Strand on this list and congratulations to the other 49 companies that have been honored as well.

To learn more about LBA Haynes Strand, set up a time to meet with one of our team members in Matthews, Greensboro, or Mount Airy!

Year End Tax Announcements and Updates

Now that fall has officially begun, it’s time to begin your tax planning for 2015 and tie up any loose ends that you may have from 2014.  The IRS recently sent out the following reminders and helpful federal income tax-saving opportunities for individuals and businesses:

October 15th Extension Reminder

About a quarter of the 13 million taxpayers who requested an automatic six-month extension for their 2014 tax returns have YET to file.  The IRS recently urged individuals whose tax-filing extension runs out on October 15 to double check their returns for often overlooked tax benefits, such as deductions for job hunting costs or moving expenses and credits for education or child care.

If you filed for an extension, you should file your return by October 15, even if you can’t pay the full amount due. By doing so, you can avoid the late-filing penalty, which is normally 5% per month, that would otherwise apply to any unpaid balance after October 15. However, interest (currently at the rate of 3% per year compounded daily) and late-payment penalties (normally 0.5% per month) will continue to accrue on any unpaid tax bills.

If you need to file an extension for your personal tax return, don’t forget to check the new box on Forms 1040, 1040A or 1040-EZ that indicates whether you had health coverage for 2014. If you plan to claim the Health Coverage Tax Credit (HCTC) for 2014, you must first file an original 2014 tax return without claiming the HCTC, even if you have no other filing requirement. Then you can file an amended return when the IRS issues further HCTC guidance.

Guidance for Filing an Amended Personal Return

Many taxpayers need to file an amended federal tax return for 2014, whether it’s to correct an error or to claim a missing credit or deduction, such as the HCTC when the final guidance is published. (See above.) Don’t panic if you need to correct your filing status, the number of dependents you claimed or your total income. The IRS allows individuals to amend a previously filed federal income tax return using Form 1040X.

But this form has specific requirements. For example, it currently can’t be filed electronically. Instead, you’ll need to file it on paper and mail it to the IRS. In addition, a separate form must be filed for each tax year that you’re amending.

In some cases, the IRS will correct math errors on your behalf. If that happens, you generally don’t need to file an amended return. Likewise, the IRS may just send you a notice for failing to attach a required form or schedule and simply request additional documentation. Such a notice generally doesn’t necessitate an amended return either.

If you expect a refund but need to amend your original return, it’s OK to cash your original refund check from the IRS. It generally takes the IRS a few months to process amended returns and issue additional refund checks. However, if you’ll owe additional income taxes, send a check as soon as possible. Doing so will limit interest and penalty charges.

To claim a refund, file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax if that date is later than the three-year rule.

Affordable Care Act Reporting For Individuals

About 800,000 taxpayers who purchased health insurance from the federally facilitated Marketplace during 2014 received an erroneous Form 1095-A, “Health Insurance Marketplace Statement.” The IRS recently reminded those taxpayers who filed a federal tax return based on their original Form 1095-A that they’re not required to file an amended return based on a corrected Form 1095-A. This is true even if you would owe additional taxes based on the new information.

However, you may voluntarily choose to file an amended return based on the corrected form if it would result in an additional refund or lower the amount of taxes you owe. You may also want to file an amended return if you filed a federal tax return based on the original form and 1) incorrectly claimed a premium tax credit or 2) failed to file Form 8962, “Premium Tax Credit,” to reconcile your advance payments of the premium tax credit.

Retroactive Extension of Bonus Depreciation and Section 179 Expense Elections

The IRS recently issued guidance on changes made by the Tax Increase Prevention Act of 2014 (TIPA) to provisions dealing with bonus depreciation options in 2014. The guidance is effective September 15, 2015.

In 2013, taxpayers were allowed to deduct 50% first-year bonus depreciation on qualifying new equipment and purchased software that was placed in service before year end. At the end of 2014, TIPA retroactively extended through 2014 the bonus depreciation provisions that expired at the end of 2013. But the extension was passed after some taxpayers had already filed their 2014 tax returns.

The recent IRS guidance provides options to amend returns to 1) claim missed bonus depreciation for assets brought into service in 2014, revoke an election, or file a change in method of accounting for the current year to claim missed bonus depreciation and 2) carry over to 2014 any disallowed Section 179 deduction for qualified real property placed in service during 2010 through 2013.

Important note: The deadline for making such an amendment is generally December 4, 2015. In some cases, the deadline may be later. Regardless, time is of the essence.

As the year winds down, it’s important to (once again) watch for legislation on these and other expired tax provisions. For 2015, bonus depreciation is currently unavailable and the current maximum Section 179 deduction is only $25,000 (compared to $500,000 for tax years beginning in 2010 through 2014). But it’s possible that Congress might extend these tax-saving opportunities again for fiscal tax year 2015.

If that happens, business owners should be prepared to act fast to lower taxable income for 2015. Remember that assets must be placed in service by no later than the end of your business’s tax year to qualify for these deductions.

Don’t miss out on any tax saving opportunities for the 2015 tax season. Contact your CPA today and schedule your no-cost consultation.

It’s A Great Time To Buy A Business

As you look to purchase a business make sure you are doing it for the right reasons.  Don’t just say, “I want to get rich.”  That line of thinking probably won’t cut it, unfortunately.  You need to make sure you have wisdom, passion, and a sound plan for your new business.  Do your Due Diligence!!  The timing is right to purchase, in fact 2015 through 2017 may be one of the very best times EVER to buy a business.  There are a number of factors that make this the best time in history to buy:

  • Supply and Demand
  • Capital Availability
  • Larger Companies Are Worth More
  • Strategic Savings

1. Supply & Demand

As Baby Boomers are exiting their companies – there are lots of sellers, but there are not as many buyers as there were 10 years ago.  This makes the selection of businesses to buy better than the past.  Also technology has helped in this regard.  Most Capital Advisors that provide buy side searches or sell side representation have access to websites that list companies that are up for sale.  This makes it much easier to find the demographic fit, niche fit, and value that the buyers are looking for.  Therefore, when a business owner comes to a Capital Advisor they are receiving information on numerous companies that are interested in selling, and have more choices than they would have had at any time in the past.

2. Capital Availability

The Private Equity Groups, Private Investors, and Banks have more money on the sidelines that they want to put to use in the marketplace than ever before.  Additionally, interest rates are still at historic lows (however this could change slightly in 2016 – so keep an eye on this) – so borrowing capital to buy a business can be done very efficiently.

3. Larger Companies Are Worth More

Acquiring 1 to 3 competitors and building your current company may change the multiple you get on an exit from 4x to 6x of EBITDA.  The big difference here is that you may be buying a smaller business for 3x the earnings and later as you combine it with your business and thus resell a larger business in the future, you may be able to get a rate arbitrage on your purchase.  Thus, the same business you bought for more than 3x.

4. Strategic Savings

If you already own a company in the given industry and you acquire another one, the savings could be 5 to 25% on expenses for the combined company.  Which means you could add more profit and cash flow than the prior owner.  There are many different expense categories that would overlap, and when you combine companies you wouldn’t have to pay twice!

For more information on how LBA Haynes Strand Capital Advisors can help you successfully buy a business, click here for your no cost consultation!  In the meantime, click the button below to download your free report: “The Essential Guide To Successful Mergers and Acquisitions.”

Attention Business Owners: Don’t Just Survive….Thrive!

Are you helping your business thrive or are you helping it survive? If you are a business owner you may be spending too much time focusing on how to keep the ship afloat and not focusing enough on the opportunity to shift your time and attention to helping your business thrive.  One option to assist you is outsourcing business functions to professionals.  Look outside your company for consultants, for example a CPA firm that provides bookkeeping or outsourced accounting services.  This can save you time and money, as the fee will likely be less than hiring a full time accountant on your staff.

The moral of the story: Don’t try to wear all the hats!

Business owners that try to wear all the hats simply don’t have time to focus on their business.  They are too busy focused on the mundane activities such as accounting, marketing, hr, etc. As the leader of your business, you should be spending 0% of your time crunching numbers of everyday finances, and 100% of your time finding ways to increase the overall value of your business.

Let’s examine how outsourcing your accounting function can give you a tighter grip on managing your business in its entirety:

Outsourcing Saves Time

Your accounting department shouldn’t require a babysitter. You might think it’s your duty to manage work flow, or you might just be intent on keeping a close eye on your company’s finances. Is this really the best use of your time as the leader of your business? What you should be doing is checking in to each of your departments, ensuring smooth sailing, and then getting back to running your business as a whole.  

Outsourced accounting allows you to do this by taking all accounting issues off your hands. With an outside accounting firm, you are relieved of the day-to-day oversight of your company’s finances. Your available time increases, and you feel confident in taking that time to tackle other, more important, business issues.

Outsourcing Gives You An Organized System

When you ask your bookkeeper for a specific document, they should be able to retrieve it immediately. There shouldn’t be massive amounts of time spent digging through files and searching through desktops.

If you’re like most successful business owners, disorganization conflicts with your strategically structured approach to running a business. When you have a CPA firm on your team, your files are classified by revenue, or expense or location – however YOU want them to be classified. Which brings us to your next point…

Outsourcing Puts You In Control

You obviously have control over your business if you own it, but are things being managed according to your guidelines? Are the financial policies and procedures your company requires being put into place? You may not have tremendous accounting knowledge, but you have ideas on how you’d like to see your reports compiled and presented.

A good CPA firm abides by these ideas, taking your business plans and reporting preferences and arranging them in an easy-to-read, comprehensible format. For example, if you’re not 100% in tune with 100% of your expenditures, a CPA firm might recommend a weekly, monthly or quarterly cash flow analysis, depending on your needs.

The fact that you are not an accounting expert shouldn’t prevent you from creating policies around your finances.

Leading your business means bringing about a brighter future, looking at the overall picture, and not busying yourself with daily duties throughout your departments. Even if your accounting department is performing adequately, as a leader, it is your responsibility to turn “adequate” into “effective” if you want to achieve sustainable business success. Outsourced accounting services ensure this effectiveness, and give you the time and tools you need to lead your business.

Want to learn more about the benefits outsourced accounting provides for your business?  Click here to start the conversation about your financial future with LBA Haynes Strand or click the button below to download your free whitepaper on the subject!