What federal and state tax changes should business owners be aware of when filing their 2017 taxes?
If tax reform is not passed, there will be very little change for businesses on 2017 taxes. The key element already in place for 2017 is business expensing rules for the immediate deduction for capital purchases to expire annually. The major reforms for 2018 are still pending as of this writing.
How could the IRS’ focus in 2018 on tax gaps affect employment tax issues?
The tax gap is created when employers do not voluntarily remit the required employee withholdings and employer taxes to the IRS or state governments. The tax gap has grown to approximately 400 billion per year.
In 2018, the IRS is focusing on greater voluntary compliance by educating preparers and taxpayers and working with businesses on employment tax issues. Should this issue go unaddressed, it could create higher payroll taxes to mitigate the tax gap. However, the goal is to increase voluntary compliance.
What can business owners do to prepare for and manage changes to health insurance premiums in 2018?
The runaway cost of health insurance - and all types of insurance - is one of the largest threats to business owners. Currently, we have a tax plan where premiums are in place without the ability to negotiate or reduce the cost. A promised repeal of Obamacare may be a short-term fix, but I do not see this as a long-term solution. I believe that business owners and employees must partner by sharing costs.
What is the most common mistake business owners make in terms of accounting, and what solution do you recommend?
I find that most business owners create their first accounting problem at the onset of their business. Fundamentals, software and personnel simply do not get off to a good start. Business owners do not usually keep up with their day-to-day accounting.
We find that they go into business to do what they love, and accounting becomes a necessary but unwanted side task. My advice is to use a professional to establish a baseline when you open the business.
If accounting is not your forte - or if you are falling behind in keeping your bookkeeping up - a professional is more than worth their fees. With today’s technology, an efficient collaboration with an outsourced accounting solution can simplify this process and allow the owner to focus on what they do best.
What is your advice for effectively managing payroll?
I am a staunch believer in outsourced payroll. Payroll compliance requires a constant knowledge of federal, state and unemployment enforcement.
These rules change constantly and create liability problems that should be outsourced. Two out of every three business tax compliance issues arise from payroll errors or from employers simply not knowing what they don’t know.
What are the benefits and obstacles to hiring freelance employees/ contractors versus fulltime staff members?
Freelance and subcontractors provide savings to the employer to include payroll taxes and benefits. Rules can be confusing in many cases as to how you categorize independent contractors versus employees. That confusion creates the obstacles.
A lot of standardized individual precedents are in place for how various businesses are allowed to treat labor on this subject. We see more and more of the workforce going to full-time employees to assure retention of a good staff.
What new technology trends do you recommend for helping business owners manage their finances?
First and foremost, I recommend QuickBooks Online. For those businesses using desktop versions, consider using Cloud-based technology to host QuickBooks which will improve security and collaboration with an accounting firm. We encourage clients to use apps to track mileage (MileIQ or Intuit mileage apps), track expenses, and take photos of receipts.
What questions should business owners ask when looking for outside accounting services?
Business owners should understand the scope of the engagement. What is included in the service level? Are there various tasks that a firm does not execute?
Our model is full-service accounting and tax service from start-up to sale. You may find firms that do not do payroll or bookkeeping. The selection of one of these firms may require you to have more than one vendor to meet your accounting needs.
You want to have a vendor or vendors that can meet all deadlines associated with returns being filed and/or the other deliverables agreed to in the initial engagement.
How can an accountant assist an entrepreneur in the planning or early stages of a business?
Engaging an accountant in the early stages of any business venture will help an entrepreneur avoid costly mistakes.
You want an accountant who is a teacher at heart – someone who makes asking questions easy and comfortable.
An accounting firm should see itself as a partner in your success. They can provide clear direction on step-by-step planning and create a communication plan that fits your needs, whether that is daily, monthly or quarterly.
Every business is unique. An accounting firm that learns about each unique client and tailors its services to meet those unique needs is key to a healthy growing business.
Contact Stroud & Company CPAs, PLLC at (910) 793-5454 or visit their website at www.stroudcompanycpa.com.