IRS Business Owners

Interacting with the IRS: New Business Owners

Did you start or acquire a new business this year? If so, you may feel a little overwhelmed with the new responsibilities and you could be a little intimidated interacting with the IRS for the first time. The first thing you should do as a new business owner is get a tax ID number or Employer Identification Number (EIN). You can apply for this directly through the IRS online.

Your Tax Responsibilities:
  • File your business’s annual income tax return
  • Pay estimated taxes for you if you own a pass-through entity or for your C Corporation
  • Payroll Tax Activities: withholding, depositing payments, and filing employer tax returns
  • Submit information returns if you have independent contractors, maintain qualified retirement plans, or offer other benefit programs to your staff

You can and sometimes must handle certain tax responsibilities electronically. Many online activities can be facilitated utilizing government provided resources listed below. Not everything listed below may apply to you so remember to consult your accountant if you have any questions.

Depositing Taxes
  • If you have a payroll or make estimated tax payments, schedule your tax deposits in advance by using EFTPS.gov.
  • Transmit W-2s to the Social Security Administration
  • Submit copies of employees’ W-2s with an IRS transmittal form (Form W-3) to the Social Security Administration through the Business Services Online. This suite of services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet. You must register and create your own password to access Business Services Online.
  • Remit Information Returns to the IRS
  • You may have to file annual information returns to inform the IRS about your payments to independent contractors you utilize. Complete this task through the Filing Independent Returns Electronically (FIRE) System
Filing Annual Retirement Plan Returns

If you want or need to file a form in the 5500 series electronically, do this through the Department of Labor’s EFAST2. This is an all-electronic system designed by the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. The purpose is to simplify and expedite the submission, receipt, and processing of the Form 5500 and Form 5500-SF. These forms must be electronically filed each year by employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

If you need assistance with any of the required tasks above, our professionals can help. Click here to contact us today!

practice sales and use tax

Sales and Use Tax for Practice Owners

Over the past few years we have seen an increased focus by the North Carolina Department of Revenue (NCDOR) on dentists for the audit of sales and use tax compliance. With this in mind, we want to work with our Practice owners to educate and proactively prevent the massive impact these audits can cause.

Sales tax is what we all expect to pay when we purchase items in our day-to-day lives. As a Practice owner, it is necessary to charge sales tax on certain items like electric toothbrushes. As a general rule of thumb, we tell our dental clients: If it leaves in the patient’s mouth, the items and services are NOT subject to sales tax. With this being said, everything else that does not leave in the patient’s mouth may be subject to the tax. If you are unclear which items this applies to, our team will work with you to review your product offerings and determine which items sales tax should be added to.

When looking at use tax, this is what applies when you purchase items from a vendor and they do not charge you tax. If you receive invoices for supplies and equipment or office supplies, your Practice is responsible for reporting this information. In addition, you must pay the sales tax the vendor did not charge. For example, this could be when Practice owners purchase items from out of state suppliers, online vendors, or small retailers.

While it can be time consuming and difficult, compliance with both parts of the tax is necessary. For this reason, one of our main goals is to implement procedures to ease the compliance process for our clients.

Best Practices

Each month you should total the number of items sold by your Practice that were subject to sales tax and forward to your accountant. Remember, review your Practice Management software reports as this information may already be shown.

For use tax, we recommend you include your office manager or a trusted member of staff in this process. This staff member must review all invoices from your vendors to verify if sales tax was charged. If not, those invoices should be set aside for payment of Use Tax. This information needs to be shared with your accountant on a regular basis.

To learn more about how we can support your Practice in this process, contact us!

Community Service

LBAHS Day 2019: Second Harvest Food Bank

Each year, our office doors close to provide employees with the opportunity to give back to a local organization. We call this “LBAHS Day.” This year, LBAHS Day took place at the Second Harvest Food Bank of Metrolina (SHFBM). This organization strives through education, advocacy, and partnerships to eliminate hunger. They do this by the solicitation and distribution of food throughout the Charlotte metro area.

Our LBAHS staff looks forward to this day each year. They jumped right in to help clean, organize, and sort donations throughout the warehouse. Kasey Mayfield, an associate, describes, “Despite being at different offices most days, we all got into an efficient rhythm while inspecting and sorting together. At one point, we had to organize the largest bin of canned goods I’ve ever seen. It started with five of us sorting but an assembly line formed and we knocked out the whole bin in around 30 minutes! Knowing there was a whole team of people there to give us help was an awesome feeling.”

Brandi Dunn, a senior associate, summarizes the day by saying,”It’s always fun to take a break from the office and able to help the community! I am glad our firm sees the value in this.”

To learn more about Second Harvest Food Bank and how you can help, click here!

In both 2017 and 2018, our team volunteered at Out of the Garden Project in Greensboro.

529 IRA

Saving for College: Roth IRA or 529 Plan?

College is expensive and the cost continues to rise each year. As a parent, you want to be prepared and start saving for this expense early. There are a few tax-smart options to consider when saving for this expense – a Roth IRA or 529 plan. When you utilize an account that offers a tax break, you have the ability to stretch your money further. There are pros and cons for both of these options. Review the details to help decide which account would work best for you and your family.

Basic Overview
The Roth IRA was created to encourage people to save for retirement. The difference between a Roth IRA and other traditional retirement accounts is the ability to withdraw contributed money any time, free of taxes and penalties. 

529 plans are similar to Roth IRAs but were intended for people to save for college instead of retirement. As long as the money withdrawn from the plan goes to qualified education costs, you will not owe taxes or penalties.

Roth IRAs
While you are able to withdraw contributed money, keep in mind that you will owe taxes and a 10% penalty on any investment earnings you take out of this account before age 59 ½. However, an exemption could work in your favor. If you withdraw money to pay for qualified education costs, you will not owe the 10% penalty, but you will still owe taxes on any investment earnings withdrawn.

Many people prefer the Roth IRA because of the flexibility and variety of investment choices. If you aren’t 100% sure your children will attend college, this may be option for you. That way, you can save the money now and decide what to utilize it for later. 

529 Plans
While you will owe taxes when withdrawing investment earnings from a Roth IRA to pay for qualified education costs, you will not face the same dilemma with the 529 plan. However, if you withdraw money from a 529 plan and it goes to another purpose other than education, you will owe both taxes and a 10% penalty on investment earnings. With this being said, it may seem like the Roth IRA is the way to go just in case your child decides to forgo college. Here are a few more factors to consider:

  • Does your state offer a 529 tax break and a good 529 plan option? The deduction or credit is like free money.
  • Are you going to need financial aid? Roth withdrawals generally count as income when completing the Free Application for Federal Student Aid (FAFSA). Having more income translates into receiving less aid.

You should always consult a professional before making any financial decisions. We can help. Contact us today!

Buy a business

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 way of thinking probably won’t cut it, unfortunately. You need to make sure you have wisdom, passion, and a solid plan for your new business. Do your due diligence!

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

Supply and Demand

As baby boomers exit their companies, there are more sellers and less buyers which makes the selection of businesses to buy better than it has been in the past. Many Capital Advisors that provide buy side searches or sell side representation have access to websites that list companies for sale. This access makes it easy to find the appropriate demographic, niche, and value that buyers are looking for. When a business owner comes to a Capital Advisor for guidance, they receive information on numerous companies interested in selling and have more choices than they would have had in the past.

Capital Availability

Private equity groups, private investors, and banks have more money they want to put to use in the marketplace than ever before. Additionally, interest rates are at historic lows so borrowing capital to buy a business can be done efficiently.

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. Consider buying a smaller business for 3x the earnings. Later as you combine it with your business and resell the 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. Some call this the buy-then-sell strategy.

Strategic Savings

If you own a company and acquire another one in the same industry, you could save 5 to 25 percent on expenses for the combined company. This means you could add more profit and cash flow than the prior owner. There are many expense categories that overlap. When the two companies are combined, you will not have to pay twice.

LBA Haynes Strand Capital Advisors can help you sucessfully buy a business. Contact us for a no-cost consultation!

Top 10 Mistakes in Mergers and Acquisitions

The merger and acquisition process can seem daunting to someone who has no experience and isn’t working with a broker. Over the years we have heard a number of horror stories and have compiled the following list of the top 10 mistakes in mergers and acquisitions:

Read more
dental accounting mistakes

Dental Accounting Mistakes

Simple accounting mistakes can cause major financial problems for a growing dental Practice. In order to avoid these, Practices must have an accurate and well-maintained accounting system in place.

Understand the differences between cash flow and profit.

Many dentists and in-house accounting staff do not understand financial reports and may wrongly assume profit equals cash available. This mistake could result in a Practice owner making purchases and incurring penalty and overdraft fees. For this reason, it is important to know the different between the two.

Profit is the result of revenue less expenses for a certain period of time. Cash flow is money moving in and out of the business from the beginning to the end of a month. If a Practice owner wants to know how much money the Practice has available, they are looking for the cash flow number.

Do not accidentally record transactions in a previous period.

It is important to “close the books” on a monthly basis. A common mistake is to accidentally enter transactions from a previous period. This will result in balance adjustments that do not match the bank balance or financial reports. If this error goes unnoticed, all future reports, tax documents, and cash figures will be incorrect. The mistake can become a larger issue and result in misrepresentation of cash and penalties from the IRS.

Use an industry standard chart of accounts.

When building your accounting system, a dental accountant should set up and track accounts according to dental industry standards. Our dental team focuses on establishing a dental specific chart of accounts. This way, we can provide the insight necessary to streamline and grow your Practice.

Work with a dental specific CPA.

It can take a while for owners to notice mistakes made by inexperienced accounting employees. For example, they may not realize a mistake has been made until they receive high tax bills, notice incorrect cash account reconciliations, or theft occurs. For this reason, it is crucial for Practice owners to work with an experienced dental specific CPA.

Our team of professionals wants to help you save time, money, and implement an effective accounting system. To learn how we can support your Practice, contact us!

Asheboro Expansion

LBA Haynes Strand PLLC Acquires Asheboro, NC Office

LBA Haynes Strand is excited to announce the acquisition of the Asheboro office of Cherry Bekaert LLP. With this acquisition, we will expand our firm’s footprint to maintain the Asheboro office location. With nearly 80 professionals across North Carolina, clients will have access to local resources and immediate support.

“Our firm has been focused on the middle market client base for more than three decades,” said LBA Haynes Strand CEO and Principal, John Bly. “We are excited for the opportunity to add quality team members in the Asheboro market, along with a strong client base. This is the next step in our firm’s growth plan.”

Cherry Bekaert partner, Brad Crumpler, has announced his retirement and will assist our firm through the transition period. Elizabeth Scott (Senior Associate) and Donna Smith (Administrative Assistant) will be joining the LBA Haynes Strand team.

Principal Chris Bunting will continue to lead the firm’s assurance department while principals Dave Recchion and Courtney Ageon will build and maintain local relationships in the Asheboro community. In addition, the Greensboro office team will be readily available to support all client needs.

Since its inception, the focus of LBA Haynes Strand has been to become a partner in our clients’ success. Cherry Bekaert clients will be able to continue working with high quality professionals committed to delivering excellent client service.

LBA Haynes Strand expanded into Winston-Salem in January 2019 and looks to grow more across North Carolina and the southeast.

tax free weekend

Tax-Free Weekend in South Carolina

If you’re anything like our LBAHS employees, you have already planned your weekend shopping trip. For those who may not know, August 2nd through August 4th is tax-free weekend in South Carolina. This is an annual sales tax holiday where both resident and non-resident shoppers are provided with the opportunity to purchase certain items free of sales and use tax.

This is a great time to go back-to-school shopping and save on school supplies, shoes, and clothing. In years past, shoppers have saved between two and three million statewide during South Carolina’s tax-free weekend. We have created a small list below of exempt and non-exempt items to give you an idea of what items may be of interest to purchase during this time period.

Exempt Items – items you will not have to pay tax on
  • Clothing
  • Footwear
  • School supplies including bookbags, binders, lunchboxes, calculators, etc.
  • Computers, printers, and computer software
Non-exempt Items – items you will have to pay tax on
  • Jewelry
  • Cosmetics
  • Furniture
  • Rental of clothing and footwear

If you plan to go shopping, be sure to check out the full list of exempt vs. non exempt items from the South Carolina Department of Revenue. The Federation of Tax Administrators has also provided a full list of sales tax holidays nationwide.

resources

Resources for Small Business News

Are you a small business owner without go-to resources for your business news? It is important to stay on top of industry updates, events, and ideas that may impact your small business. However, we know that running a small business is no easy feat. When you have five extra minutes, you do not want to spend them sifting through news outlets, deciding what is trustworthy and worth reading.

In order to help with this, we are sharing a blog post by Meredith Wood of Fundera. Meredith provides readers with an organized list of resources including websites, blogs, and social media pages to follow. When utilizing this list, business owners will save time and have easy access to helpful advice and information.The list provided includes sources that will share the latest news and updates in capital expenses, loans, budgeting, forecasting, marketing, social media, taxes, HR issues, government standards, etc.

For example, one of our favorite suggestions in the list is New York Times: Entrepreneurship & Your Taxes. The New York Times is common reading material for most people but the particular sections Meredith mentions, we find important. The first one being Entrepreneurship and the second being Your Taxes. Both of these sections highlight subjects like small business tax, healthcare reform, and credit scores.

Click here for the 37 Best Resources For Small Business News

succession planning

Business Succession Planning: What is it?

From the day you start your business, you are focused on both present and future growth. However, many people never think of life after the business or succession planning until it’s too late. How do you know it’s too late? Typically, business owners don’t start thinking about this until a major life event occurs, they are burned out and need to sell, or someone comes knocking and wants to acquire their business. According to a Wilmington Trust Survey, 60% of business owners do not have a succession plan in place.

None of the times previously mentioned are the best time to start a succession plan or think about it, as you are under stress. The best time to put together a plan is when you start your business. If you didn’t do it then, the next best time is today!

What exactly is business succession planning? It starts with answering a series of questions with yourself, your family, your executives, and your advisors. The purpose is to make sure what you have built in your business continues on, not just for legacy, but for the people, and families, that you are providing a job to. There are a lot of critical things to think about in a succession plan. It helps you decide what happens to your business if something were to happen to you.

Does it go to management? Does it pass to your estate? Will the business just fold up and close? How is all of this planned both structurally and financially?

A succession plan is an iterative process. Business owners need to pick it up once a year and re-read to say, yes this still fits where I am in my life and where my business is, or it needs changes.

If you are a business owner without a succession plan in place, contact us to schedule a no-cost consultation.

IPA Top 400 Accounting

LBA Haynes Strand Named Top 400 Firm

LBA Haynes Strand is one of the Top 400 American accounting firms according to INSIDE Public Accounting. The firm appears on this list for the second year in a row. The IPA 400 ranks firms by their net revenue, which the organization compiles by analyzing more than 500 survey responses from the largest accounting firms in the nation. In addition to this recognition, LBA Haynes Strand also ranks as a Best Place to Work by the Charlotte Business Journal and a Fastest-Growing Privately Held Company by the Charlotte Business Journal and INC 5000.

About LBAHS

LBA Haynes Strand is a full service accounting, assurance, tax, and advisory firm with offices across North Carolina. LBA Haynes Strand provides value-added services throughout the service delivery process to improve operations and ensure compliance with relevant regulations. We take a strategic and holistic approach to accounting that looks at more than just your business tax situation. Our team works to understand your finances, your culture, your goals, and your aspirations. With this comprehensive understanding of your organization in place, our firm is able to provide the best possible service. We help you protect and improve your organization’s fiscal health and well-being — for now, and for the future.

INSIDE Public Accounting (IPA)

IPA’s annual rankings of the 400 largest firms in the U.S. range from the multi-billion-dollar Big 4 to firms of roughly $5.5 million in net revenue. The list includes firm headquarters, MP, net revenue, ranking in the previous year and percentage change. The rankings are compiled from data gathered in the annual IPA Survey and Analysis of Firms. The annual survey attracts participation from 550 firms.