At the start of 2024, three dozen states and New York City already had pass-through entity taxes (PTETs) on their books, with legislation pending in three other states. These types of workarounds for the current $10,000 cap on the federal deduction for state and local taxes (SALT) have become more prevalent. But they aren’t necessarily the right option for every pass-through entity, partner or shareholder. Businesses and their individual owners must consider the pros and cons before electing this tax treatment.   The Basics PTETs developed as a response to the SALT limit imposed by the Ta ..read more

In an uncertain economy, it’s important to use all possible methods available to analyze and evaluate your company’s financial health. Here are two metrics owners and managers might find helpful: breakeven and burn rate.   1. Breakeven Analysis Breakeven represents the point at which revenue equals total costs. It’s also the volume of sales at which a company (or investment) starts earning a profit. To calculate your company’s breakeven point, first categorize all costs as either fixed (such as rent and administrative payroll) or variable (such as materials and direct labor). Next, calcul ..read more

Most business valuation assignments call for a conclusion of value. However, there may be times when a calculation of value can be a quicker, more cost-effective solution.   Value Conclusions When providing conclusions of value, valuators consider all approaches and procedures they deem appropriate for the circumstances. The valuation takes into account applicable valuation practices and standards, as well as any relevant legal precedents. The result may be presented as a single amount or a range of values. This level of service generally produces a comprehensive, reliable estimate of how ..read more

For construction companies, accounting isn’t as simple as just balancing the books every month. Contractors tend to have multiple projects underway at various stages of completion and, ideally, more in the pipeline. Your accounting practices need to be nimble, multifaceted and comprehensive. Unfortunately, from underperforming budgets to overlooked expenses, contractors often find themselves grappling with financial reporting challenges. Let’s look at two “big picture” accounting problems common to many construction businesses.   1. Lack of Organization Among the most prevalent causes of ..read more

The rules for deducting depreciation expenses on vehicles used for business purposes have been liberalized under current tax law, but they remain complicated. In addition, annual inflation adjustments make allowable depreciation deductions moving targets. (See “First-Year Depreciation Deductions under the TCJA,” below.) Here’s how to calculate depreciation deductions for cars, SUVs, pickups and vans used in your business.   2 Methods for Deducting Business Vehicle Expenses Business owners must choose between the following two methods for claiming allowable business-use vehicle deductions ..read more

Monthly financial statements are the cornerstone of a thriving business. Yet, relying solely on cash basis accounting practices – such as entering deposits and bills into QuickBooks – may leave significant gaps in your financial visibility. These gaps can distort your understanding of what’s truly driving your business performance. Maintaining your accounting records on an accrual basis is key. This method allows you to track your revenue and expenses as they occur, providing you a more accurate and reliable snapshot of your financial health. Bookkeeping Issues Many small and midsize business ..read more

Once your business has survived the start-up phase, it’s got a solid foundation to grow. Business and financial advisory services are critical at this stage of development. Here are some major areas or functions of your company to focus on as you look to take it to the next level.   Financial and Tax Reporting Businesses in the growth stage usually have more-sophisticated financial reporting needs than start-ups. As a result, those that previously relied on cash- or tax-basis accounting methods may need to graduate to accrual-basis methods and follow U.S. Generally Accepted Accounting Pri ..read more

You’re probably knowledgeable about the FICA tax, which was established by the Federal Insurance Contributions Act, and is paid by both employers and employees through payroll deductions. FICA tax includes a Social Security and Medicare portion. Less is likely known about the FUTA tax, authorized by the Federal Unemployment Tax Act. This unemployment insurance tax is the sole responsibility of employers. Here’s how FUTA is assessed and paid.   FUTA Facts The FUTA tax funds a program that helps individual states pay unemployment benefits for certain workers who have been terminated from th ..read more

Does your business need to prepare financial statements that conform to U.S. Generally Accepted Accounting Principles (GAAP)? Or can you simply generate financial statements based on the same methods you use for federal income tax purposes? It’s important for business owners and managers to understand the key differences between these two common accounting frameworks, so they don’t miss out on potential business opportunities.   GAAP Basics GAAP is the most common financial reporting standard in the United States. It’s based on the principle of conservatism, which generally ensures proper ..read more

For construction businesses, financial management is notoriously complex. Contractors have to deal with the ebbs and flows of their respective markets, project-based pricing and collections, rising operating costs, and various other factors — not the least of which is bad weather! Yet effective financial management is essential for your company to thrive. Here are some ways to better manage your money.   Follow Strong Billing Procedures Healthy cash flow — one of the most important aspects of financial management — depends on your business’s ability to both meet contractual obligations an ..read more