Thursday, July 19, 2018

Changes in Not-for-Profit Organization Financial Statement Presentation



In August of 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14.  This ASU changes the financial statement presentation for not-for-profit organizations effective for fiscal years beginning after December 15, 2017.  The main areas of changes are outlined below.

Net Assets – These are to be reflected as either with donor restrictions or without donor restrictions, rather than the former presentation of unrestricted, temporarily restricted or permanently restricted.  Information pertaining to board designated net assets is now mandatory rather than optional.

Endowments – The presentation of underwater endowments is reflected in net assets with donor restrictions and bear additional disclosure requirements.

Investments – Investment income is no longer required to be broken down by components, and expenses are no longer required to be disclosed.  Investment return shall now be reported net of external and direct internal investment expense.

Asset Liquidity – Not-for-Profit organizations are now required to disclose qualitative information on how the entity manages its available liquid resources and the related liquidity risk.  Organizations must also disclose quantitative information that communicates the availability of current financial assets on the date of the statement of financial position.

Expenses – All not-for-profit organizations must now report expenses by function and natural classification and disclose the methods used to allocate costs among programs and supporting services.

There are also additional requirements pertaining to the presentation of special events and capital campaigns.

Call us at (219) 769-3616 with your questions, or email them to rbest@swartz-retson.com.

Monday, July 9, 2018

Application for Reinstatement for Administratively Dissolved Entities in Indiana


Indiana Governor Holcomb signed Senate Enrolled Act 180 into law on March 13, 2018.  This legislation limits the amount of time that a business can file an application for reinstatement after it’s been administratively dissolved or revoked by the Indiana Secretary of State.  A business that has been administratively dissolved or revoked for five (5) years or more may not be reinstated.  The clock starts on the date of administrative dissolution or revocation.

Based on the recent change, the Indiana Secretary of State’s office will accept applications for reinstatement for businesses that have been administratively dissolved or revoked for more than five years for a brief period of time.  If your business has been administratively dissolved or revoked for more than five years, please ensure that you have submitted your application for reinstatement to the Secretary of State’s office no later than July 31, 2018.

Please be advised that it takes the Department of Revenue between 4 to 6 weeks to generate the certificate of clearance that is required as part of the application for reinstatement.  Do not delay in making this request to the Department of Revenue to ensure you meet the July 31 deadline.  This will be your final opportunity to reinstate.

For businesses that have been administratively dissolved or revoked for less than five years, you will have five years from the date of administrative dissolution or revocation to file an application for reinstatement.  For example, if the business was administratively dissolved on January 11, 2015, you must file an application for reinstatement by January 10, 2020.  If you miss the five year deadline, you will not be able to file an application for reinstatement under the new law.  You must also consider the 4 – 6 week processing time for certificate of clearance requests from the Department of Revenue.

Call us at (219) 769-3616 with your questions, or email them to tlynch@swartz-retson.com.

Information taken from www.in.gov.

Five Tips for Smarter Banking


Banks are a necessary tool to navigate our daily financial lives. Unfortunately, there are aggravating practices at many banks that drive us crazy or cost us money. Here are five tips to get more out of your bank and pay less.

Tip #1: Remove cash from the right place. Never use an ATM machine that is not in your bank's network. In-network cash withdrawals cost nothing at most banks, but withdrawals from someone else's machine may come with a $3 to $5 fee.

Action: Turn over your ATM or debit card and note the networks on the back of the card; or ask your bank about their network coverage. Only use ATMs within the network. Test a transaction to ensure no fee is included on your statement.

Tip #2: Notify your credit card issuer when traveling. Most credit card-issuing banks now automatically freeze your cards when a suspicious transaction occurs out of state. This freeze often includes foreign website transactions.

Action: Call your credit card issuer when you are going to be traveling. Also notify them if you wish to order an item from a foreign website. This can alleviate numerous headaches. While some banks may not block out-of-state transactions, you do not want to have a transaction rejected while purchasing something on a trip.

Tip #3: Know your bank's overdraft rules. Non-sufficient funds (NSF) checks are not only embarrassing, they are expensive. Banks make millions on their overdraft fees and automatic loan features when you overdraw your account. Understand your bank's fees and how they apply to your accounts.

Action: Look for a bank that will allow you to link another account to your checking account without charging a fee. For instance, as a courtesy many credit unions allow you to link a savings account to your core checking account. This link comes into play should you inadvertently overdraw your checking account.

Tip #4: Always negotiate fees. If you are a long-standing customer with your bank or credit card company, call them to reduce or waive fees. Good examples of this are over-the-limit credit card fees or late payment fees. If you have multiple checking overdraft fees, negotiate to eliminate as many as possible.

Action: If you are late in paying your credit card or have an overdraft, fix the problem as soon as possible. Only after fixing the problem should you call to negotiate the fees. The bank customer service representative will see your quick action and will be more likely to help reduce the fees.

Tip #5: Be willing to shop. Banks understand the power of inertia. They know it's a pain to change banks. But if you are willing to do so, you might be surprised to find better alternatives for less.

Call us at (219) 769-3616 with your questions, or email them to gward@swartz-retson.com.

Business Disaster Recovery Plan Essentials


Irish writer Oscar Wilde advised us to "expect the unexpected." He would have made a good disaster planner. Small businesses are the most impacted because they do not usually have a formal disaster recovery plan. As a result, 40 to 60 percent of small businesses close permanently after a disaster, according to Liberty Mutual Insurance.

Don't be a part of that statistic. Now is a great time to review your business' disaster recovery plan, or to make one if you don't have one. By focusing on some of the most critical elements of a disaster plan, you can avoid being overwhelmed by the challenge.

Set your roster
The first step in your disaster plan should be to determine what skill sets you will need in a disaster, and who should be part of the team. The size of your team will vary, but could include IT, HR and operations personnel. Determine who your backups are and what outside resources and personnel you can use.

Assess your risk
You need to understand your risks before you address them. Consider your physical locations and determine the hazards unique to your region – floods, hurricanes, tornados, earthquakes, etc. Focus on the events most likely to occur, but also save some time to consider outside possibilities.

Create your plan
Determine and rank the most critical functions and processes for your business. Next, determine how these could be affected by the risks you've identified. You should end up with two lists: your most important business factors, and those most at risk. Now you are ready to create a recovery plan that focuses on critical business functions and applies them to the various types of possible business interruption. Your plan should:

·        Consider offsite backups and vendors to help assist with implementing a data storage backup plan. Assess where you store the critical information upon which each of your business functions rely.
·        Establish alternative or remote work arrangements for employees, including their physical, logistical and data needs.
·        Create an annual review of your insurance policies. Evaluate the worth of business interruption coverage within your property and casualty insurance. You may wish to offset some of the potential loss of both business income and recovery expenses within these policies.
·        Consider any opportunities for tax relief from losses sustained as a result of a disaster. Have a plan to keep detailed records and build the appropriate supplier team to help determine the best approach for your business.
·        Make sure you plan for a variety of losses. This can be loss of electricity, a fatal crash of your business systems or material damage to inventory and production capacity.

Communicate
Document your plan so it is clear, accessible and easy to implement. Share it with everyone on your disaster roster so they know who is responsible for what and how they should act. Review and test your plan at least annually with your roster, and distribute any changes to keep everyone informed.
With luck, you will never need to use your business disaster recovery plan. Although we can never prevent disasters, we can do our best to reduce the impact they have on business operations.

Call us at (219) 769-3616 with your questions, or email them to gward@swartz-retson.com.

Personal Property Tax Notices

Now that the filing deadline for property tax returns has come and gone, the assessors are working to process the returns.  Businesses that filed an Indiana personal property tax return may receive tax notice 113/PP from their assessor.  A company that receives this notice only has forty-five days from the mailing date to respond or appeal.  Please watch for tax notices from your assessor.  

If you receive a notice, please scan or fax a copy to the attention of Stephen A. Sienicki, CPA at ssienicki@swartz-retson.com, FAX (219)736-4876.  Given the deadline to respond, please make sure to forward the notice received as soon as possible.  Call us at (219) 769-3616 with your questions.

Wednesday, June 6, 2018

Tax Cuts and Jobs Act Update


The Tax Cuts and Jobs Act (TCJA) was passed by Congress in a hurry late last year, and the IRS has been working to implement the changes for 2018. Here are the latest answers to some of the most common questions about the tax overhaul:

·        Is home equity interest still deductible?

The short answer is: Not unless you've used the money to buy, build or substantially improve your home.  

Before the TCJA, homeowners were able to take out a home equity loan and spend it on things other than their residence, such as to pay off credit card debt or to finance large consumer purchases. Under the old tax code, they could deduct interest on up to $100,000 of such home equity debt.  The TCJA effectively writes the concept of home equity indebtedness out of the tax code. Now you can only deduct interest on "acquisition indebtedness," meaning a loan used to buy, build or substantially improve a residence. If you took out a home equity loan pre-2018 and used it for any other purpose, interest on it is no longer deductible.

·        I'm a small business owner. How do I use the new 20 percent qualified business expense deduction?  

Short answer: It's complicated.

Certain small businesses structured as sole proprietors, S corporations and partnerships can deduct up to 20 percent of their qualified business income. But that percentage can be reduced after your taxable income reaches $157,500 (or $315,000 as a married couple filing jointly).  The amount of the reduction depends partly on the amount of wages paid and property acquired by your business during the year. Another complicating factor is that certain service industries including health, law, consulting, athletics, financial services and accounting are treated differently.  The IRS is expected to issue more clarification on how these rules are applied, such as when your business is a mix of one of those service industries and some other kind of business.

·        What are the new rules about dependents and caregiving?

There are a few things that have changed regarding dependents and caregiving:
    • Deductions. Standard deductions are nearly doubled to $12,000 for single filers and $24,000 for married joint filers. The code still says dependents can claim a standard deduction limited to the greater of $1,050 or earned income plus $350.
    • Kiddie Tax. Unearned income of children under age 19 (or 24 for full-time students) above a threshold of $2,100 is now taxed at a special rate for estates and trusts, rather than the parents' top tax rate.
    • Family credit. If you have dependents who aren't children under age 17 (and thus eligible for the Child Tax Credit), you can now claim $500 for each dependent member of your household for whom you provide more than half of their financial support.
    • Medical expenses. You can deduct medical expenses higher than 7.5 percent of your adjusted gross income as an itemized deduction. You can claim this for medical expenses you pay for a relative even if they aren't a dependent (i.e. they live outside your household) as long as you provide more than half of their financial support.
Stay tuned for more guidance from the IRS on the new tax laws, and reach out if you'd like to set up a tax planning consultation for your 2018 tax year.  If you have questions, call us at (219) 769-3616 or email them to tlynch@swartz-retson.com.

Answers to Commonly Asked Tax Questions


With all of the headlines about the changes to tax law, you probably have lots of questions. Here are answers to some of the most common questions taxpayers have this year.

Q. I’m hearing about a lot of changes to 2018 taxes. What should I do?

A. You’re right, there are a lot of changes in 2018 due to the passage of the Tax Cuts and Jobs Act (TCJA), including to the income tax brackets. The simple answer to the question “What should I do?” is to not make any major changes until you finish filing your 2017 taxes. Once you understand your 2017 tax obligation, you are in a better position to plan for 2018.
However, there are a few things you can start thinking about now. Depending on where you fall in the new income tax brackets, you may want to consider ways to lower your taxable income. This could include increasing your contributions to 401(k) retirement accounts or health savings accounts (HSAs). You’ll also want to make sure your employer has adjusted your federal tax withholding so that you don’t have to wait to receive a large refund (or tax bill) next year. You can review the IRS withholding calculator using your latest pay stub data to make sure the changes are accurate.

Q. What is the penalty amount if I didn’t have health insurance in 2017?

A. The penalty per adult is calculated as the greater of either $695 or 2.5 percent of your yearly household income, up to a maximum of $3,264 for individuals or $16,320 for a family of five or more. Note that the penalty is still in place for tax years 2017 and 2018. The TCJA eliminates the penalty for 2019 through 2025.

Q. Is Social Security taxed?

A. It depends. You won’t pay tax on more than 85 percent of your Social Security income, but how much gets taxed depends on your income bracket. If your combined income is less than $25,000 for the year, you won’t pay tax on Social Security income.

Q. When is the last day to do my taxes?

A. Technically, Tuesday, April 17. But don’t wait until the last minute. Ask for help to get started now, or to file an extension so you have time to complete your tax return later. The sooner you file, the sooner you can get your refund. It usually takes about three weeks to arrive from the date you file. Also, remember you need to keep most tax related documents for at least three years, so don’t toss your paperwork after you file.

Q. The IRS contacted me, what should I do?

A. Ask for help. There are numerous scammers who impersonate the IRS during tax season. The real IRS will never contact you via social media, email or text message. In addition, an IRS agent will not contact you over the phone unless you first receive official correspondence in the mail. If you have received a notice in the mail, immediately ask for help to determine how to proceed.
These are just a few of the questions people have during tax season. If you have more, call us at (219) 769-3616 or email them to tlynch@swartz-retson.com.