Author: Maria T. Rollins

Maria T. Rollins, CPA, MST

KRS Business Insights Breakfast: Avoiding Employer Pitfalls

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The recent KRS Insights Breakfast featured Randi Kochman, Esq., chair of the Cole Schotz Employment Law Department. Randi spoke about best practices for hiring and documentation, and the complexities of family and medical leave.

For those who missed the breakfast, we wanted to share some of Randi’s insights.

Randi Kochman, Cole SchotzBest practices for interviewing job candidates

There are laws about what you can and cannot ask when interviewing a job candidate. “New Jersey is an employee-friendly state and there’s a long list of what you can’t ask by law,” said Randi. For instance, you can’t ask:

  • Are you married?
  • Do you have children?
  • Where are you from?
  • Are you pregnant or planning to get pregnant?

The best practice – and one that will keep you out of trouble – is to ask only what you need to know to determine if the applicant can do the job. You can ask, for example:

  • Is there any reason you can’t be here from 8 to 4 and travel to California once a month?
  • This job requires that you be able to lift 50 lbs. routinely. Are you able to do that?

She also recommended putting a salary range in any job ads. In some states, including New York, you cannot legally ask about salary history.

Bottom line: stick to asking questions that relate directly to the job qualifications.

Best practices for background checks

When you need to check out a potential new hire, you must comply with the Fair Credit Reporting Act (FCRA) and state law. “Hire a reputable firm to do your background checks,” Randi said. “There are specific forms that must be completed. These forms are very detailed and the potential employee must sign them.”

Using the Internet to check out potential employees can be risky. “There are potential problems when an employer learns information about an applicant from social networking sites that it is otherwise prohibited from obtaining, such as an applicant’s age, disability, or sexual orientation,” she noted. To reduce risk, Randi recommended:

  • Having a comprehensive Internet background search policy for your company
  • Using a third party, or “screened” employee to conduct any Internet background checks and send only information relevant to the employment search to decision makers.
  • Training employees – especially supervisors – on the risks of conducting private Internet background searches on applicants.

Best practices for HR documentation

“There are a lot of areas in the employment world that can trip you up and documentation is a big one,” noted Randi. She went on to list the extensive number of documents your employee files should contain, including, but not limited to:

  • Offer letters and employment agreements
  • Background checks
  • Job descriptions
  • Confidentiality or non-compete agreements

The complexities of family and medical leave

How and when family or medical leave can be taken by employees can be complex. The Federal Family and Medical Leave Act (FMLA) applies only to employers with more than 50 employees within a 75 mile radius of the worksite of the employee. There are also specific eligibility requirements for employees who want to apply for leave under FMLA.

Leave laws also vary by state. In New Jersey, for example, the NJ Family Leave Act applies to employers with at least 50 employees (located anywhere) who have worked for at least 20 weeks during the current or previous year.

The Americans with Disabilities Act (ADA) and the NJ Temporary Disability Benefits Law (NJTDB) also have to be considered.

“Let’s say your employee comes to you and says they have cancer and need a leave of absence. It’s important to consider all the factors that can apply – FMLA, NJFMLA, NJTB, etc.,” said Randi. “Your company also should have in place a company policy for medical and disability leave.”

We’ve got your back

At KRS CPAs, our goal is to make it as easy as possible for you to get the advice and counsel needed, so you can focus on what matters most to you. The KRS Insights Breakfast Series offers timely and relevant information from experts like Randi Kochman, who can help your company avoid HR pitfalls by following best practices.

Visit our Insights page to subscribe to our newsletter and you’ll be notified about upcoming breakfasts plus other KRS news, events and resources.

With more than 20 years of employment law experience, Randi Kochman is dedicated to helping employers understand and navigate complicated and ever-changing employment laws so they can effectively manage employees, avoid costly mistakes, and focus on their core business.  A recognized employment law expert, Randi was recently quoted in an article on tip pooling in the Society for Human Resources Management (SHRM) employment law blog.

Food Industry Trends and More: Notes from the Summer Fancy Food Show

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Maria Rollins at the Summer Fancy Food ShowWhenever a local industry trade show aligns with a KRS service offering or niche I look forward to an opportunity to get out and network with its exhibitors. I also find that the breakout education sessions are extremely relevant and offer insight to the business challenges faced by industry members. Recently I had the opportunity to attend the Specialty Food Associations’ Summer Fancy Food Show in New York City.

I was drawn to this particular show because we have many clients who are in the food and beverage industry. In addition, I am a “foodie” and was enticed by the thought of spending a day in New York City networking while sampling the latest in specialty foods and beverages.

The show lasted for four days and although I only attended the last day (usually the day with the most giveaways) I was able to get a flavor for many product and business trends. Here’s just a sampling of what I learned.

Hot product trends and business challenges

In light of the shift in consumer demand from processed foods to healthier options, I wasn’t surprised to see gluten-free, vegan, raw and “sugar conscious” products as the hot items on exhibit. Many of the dessert and snack items I sampled were marketed as gluten-free and many amount were also dairy-free and vegan.

As the gluten-free trend continues, manufacturers will face challenges in production when gluten-free and gluten products are manufactured in the same facility. The gluten-free trend will also continue to boost the need for gluten-free flour substitutes such as coconut, corn and rice flours, in addition to other ingredients needed to improve texture and consistency.

Shelf-life of gluten-free products can also be a business challenge. Many exhibitors stressed the shelf-life of their products since many of the ingredients in these gluten-free alternatives result in a shorter shelf-life compared to full gluten products.

Many of the beverage samples offered by exhibitors continued the “healthier” option theme and were low sugar alternatives to traditional sodas. Flavored waters and spritzers containing organic juices, apple cider vinegar or Acai berries were positioned as healthier alternatives to sugar-laden sodas.

I also saw many dairy-free and vegan products exhibited by small businesses and start-ups. Many of the small business exhibitors I spoke with are challenged with expanding their distribution beyond their local geographical region. Attending such premier show was an important way for these companies to get their products in front of the many distributors and buyers attending.

All the small businesses and start-ups I spoke to have e-commerce sites and will ship their products to consumers. We talked about how important e-commerce is to their growth and how it requires that they invest in technology. I also listened to panelist Monica Schechter, specialty and international food category manager at Jet.com and Walmart.com, who cited technology as a catalyst to finding new products and assisting with the discovery experience through online searching and shopping.

Turning a food idea into a successful business

My favorite experience at any trade show is talking to the exhibitors and learning the story behind their product or brand. Many are family businesses or friends who came up with an idea. They are passionate about their ingredients and the quality of the product they deliver to their consumers. As an accountant working with many start-ups and “well-seasoned” businesses, I find these stories are refreshing and often heart-warming. Common for start-ups, these stories usually include a business mistake or two they encountered along the way. After all, having a great idea is only the first step. A successful food manufacturer must build their brand, secure efficient manufacturing, seek distribution channels, set pricing, manage inventory, finance the business and market their product. The most successful businesses deliver their product more efficiently than their competitors.

My advice to small businesses and start-ups is to seek out help from professionals and mentors. I recently spoke to one food manufacturer who has grown a significant business and now offers advice to those entering the market. They are willing to share their challenges and how they overcame obstacles in growing their business.

Are Club Dues a Deductible Business Expense?

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Are Country Club dues a tax deductible expense?With the warmer weather and longer days of summer here, many business owners turn to golf and other outdoor activities for their business networking and development activities. A question I am often asked by my clients is whether they can deduct the dues for clubs at which they entertain customers or that otherwise may be relevant to their business.

Dues may or may not be deductible; depending upon the type of club and its purpose.

A business generally can’t deduct dues paid to a club organized for business, pleasure, recreation or other social purposes. This disallowance rule would apply to country clubs, golf clubs, business luncheon clubs, athletic clubs, and even airline and hotel clubs.

What about the cost of business meals held at the club with your customers?

Just because the dues are not deductible you can still deduct 50% of the cost of otherwise allowable business entertainment at a club. For example, if you have dinner with a client at your country club after a substantial and bona fide business discussion, 50% of the cost of the dinner is deductible as a business expense.

The club-dues disallowance rule generally doesn’t affect dues paid to professional organizations including bar associations and medical associations, or civic or public-service-type organizations, such as the Lions, Kiwanis, or Rotary clubs. The dues paid to local business leagues, chambers of commerce and boards of trade also aren’t considered “nondeductible club dues.”

If the principal purpose of the club is to provide entertainment facilities to its members or to conduct entertainment activities for them, most likely no tax deduction for the dues will be allowed.

Finally, keep in mind that even if the general club-dues disallowance rule doesn’t apply, there’s no deduction for dues unless you can show that the amount you pay is an ordinary and necessary business expense.

We’ve got your back

If you have additional questions about entertainment, travel, gift or car expenses, we’re here to help. Contact me at MRollins@krscpas.com or 201.655.7411.

KRS Business Insights Breakfast: Results Z to A

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People don’t achieve goals, they achieve results – Jean Oursler, a.k.a., The Queen of Results

Jean Oursler, the Queen of ResultsThe June KRS Insights Breakfast featured Jean Oursler, who is a speaker, author, and one of the country’s top business consultants. Jean shared with us the RESULTS Formula, which is a new way of thinking about goal setting and growing a business.

For those who missed the breakfast, we wanted to share some of Jean’s insights.

Thinking in terms of results requires a mindset change. As Jean pointed out, “It’s our Cave Man Brain – the part of our brain that’s responsible for our survival – that keeps us from achieving results. Our Cave Man Brain is in charge of the thoughts that hold us back, for example, when you find yourself saying ‘I can’t…’ or ‘I don’t have time to…’”

Her RESULTS Formula is a 7-step process that will help to change your mindset and improve your ability to get results:

R = Ready

E = End

S = Steps

U = You

L = Levels of Learning

T = Transformation

S = Success Celebration

Key Insight: You need to tame your Cave Man Brain to achieve the results you want. The RESULTS Formula can help you do this.

The inside scoop on the RESULTS Formula

R = Ready

To achieve results, you have to be ready. Most people are not. Ready means you have decided to want more and you’re willing to do what it takes to get it.  When you’re ready, you know that you can’t do the same thing every day, and get different or better results. You realize that you must improve every day so that you can be more successful tomorrow. You’re ready for the challenges you will face as you seek results.

E= End

What are the end results you want to achieve? What do they look like? The best way to achieve something is to first visualize what outcomes you want. By starting with the end, you can work backward to figure out the best way to begin. “Don’t start at A. Start at Z and work back towards A, so that your Cave Man Brain doesn’t get involved,” said Jean.

S = Steps

What steps will you need to take to get to your results? Think about these as action steps. The more specific you make these action steps, the more likely you will achieve results. Then write these steps down and commit to them.

U = You

To achieve greater results, noted Jean, YOU need to be involved. You need to work on yourself and the specific skills that you need to achieve the results you desire.

L = Levels of Learning

As you start to acquire the skills you need to achieve results, you will be going through different levels of learning. During this time, you may feel uncomfortable or frustrated. That is all part of the process as you try new ideas and improve.

Key insight: Successful people never stop learning and growing. You have to grow to achieve. Your results will always be better if you’re on a growth path, compared to the person who stays stagnant.

T = Transform

When you go through levels of learning, you can’t help but be transformed into a new way of thinking and being. “Don’t blow through this phase, recognize it and view the change as positive,” commented Jean.

S = Success Celebration

When you achieve results, celebrate! Celebration is an anchor that helps your brain remember the successes you’ve achieved. Celebrate every success, no matter how big or small, because it reinforces why it is necessary to continue your lifelong RESULTS Journey.

The RESULTS Formula can be repeated. When you’re ready, you can begin to implement it over and over to achieve higher levels of success.

We’ve got your back

At KRS CPAs, our goal is to make it as easy as possible for you to get the advice and counsel needed, so you can focus on what matters most to you. The KRS Insights Breakfast Series offers timely and relevant information from experts like Jean Oursler, who can help you achieve the results you desire.

Visit our Insights page to subscribe to our newsletter and you’ll be notified about upcoming breakfasts plus other KRS news, events and resources.

As the Queen of Results, Jean Oursler is all about achieving unprecedented results at unprecedented speed, which helps her clients create and maintain market dominance. Jean was recently rated by the Women’s Presidents Organization (WPO) as its #1 facilitator across the globe. She has a Master’s degree in organizational development and is pursuing a PhD in business psychology. Her next book in the RESULTS! series, The RESULTS! Formula, is due out in 2017.

Resources for Growing Your NJ Food Business

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Resources for Growing Your NJ Food BusinessWith food trucks, farmers markets and innovative “Jersey Fresh” products popping up daily, it’s no wonder New Jersey is known as a food industry hub.

According to Choose NJ, New Jersey boasts a thriving $105 billion food industry and an agriculture sector that’s growing every day. The Garden State is home to 1,900 food manufacturing companies employing about 31,000 people at last count. There are also thousands of food distribution centers, retailers, restaurants and farms. For more on the size and importance of food manufacturing to the New Jersey economy, download the New Jersey Business and Industry Association (NJBIA) report, “Food Manufacturing in New Jersey.”

At KRS, we work with many food startups, as well as established companies in food manufacturing, wholesale and distribution, brokerage, and transportation and logistics. We know how important it is to have the resources you need to grow your business, so we’ve put together this guide to the local food industry to help you.

Innovation and technical expertise for emerging and established food companies

Rutgers Food Industry Gateway combines the resources of the Rutgers Food Innovation Center and Rutgers’ Center for Advanced Food Technology to create a business incubation and economic development accelerator for the food and agricultural sectors.

The Gateway provides business and technical expertise in addition to serving as a guide to the wealth of knowledge within the many departments and institutes of Rutgers. Chief among these are:

Financial incentives and workforce development programs

Choose: New Jersey’s mission is to encourage and nurture economic growth throughout New Jersey, with a focus on urban centers. They provide relocation and expansion services, property search/site visits, and economic development connections.

Under their Grow New Jersey Assistance Program, food companies may qualify for fully-transferable tax credits by creating as few as 25 full-time jobs (10 for new technology startups). The Advanced Manufacturing and Transportation, Logistics and Distribution Talent Networks partner with businesses to develop workforce training and connect companies with already trained employees to address their needs. Download Choose: New Jersey’s food industry brochure to learn more.

New Jersey Economic Development Association (EDA) works in partnership with Choose NJ and the New Jersey Business Action Center, along with the Office of the Secretary of the Higher Education, to collaborate under the umbrella of the New Jersey Partnership for Action (PFA). The EDA’s role in attracting and retaining businesses is to administer financial resources that help companies bridge financing gaps and encourage companies to choose New Jersey over a competing location by making a project more financially viable.

Best practices for food manufacturers and suppliers

The New Jersey Food Processors Association (NJFPA) is an organization of manufacturers and suppliers of food and agricultural products joined together to promote best practices, share information and expand the food industry of New Jersey and the surrounding region.

NJFPA provides its members with access to the networking events and the resources necessary to strengthen their companies. The NJFPA holds an Annual Conference, usually in January, which provides sessions on technical innovations, sales and marketing tips, consumer trends, distribution solutions, new product and package development, and food safety issues.

New Jersey Manufacturing Extension Program, Inc. (NJMEP) is a not-for-profit company that works with New Jersey’s small to mid-sized manufacturers to help them become more efficient, profitable and globally competitive. NJMEP’s Made in New Jersey program showcases the state’s products and the companies that are manufacturing them. A key component of this program is the online directory listing NJ’s manufacturers and the products they create. Register to be a part of Made in New Jersey.

Food conferences and trade shows

Many food conferences and trade shows occur in the New Jersey and New York area. We’ve been to these four and they are worth checking out:

FOODBIZ, presented by NJBIZ, is a day of education and networking designed to benefit New Jersey business owners and operators in the food and beverage industries. The event brings together buyers and sellers in this business-to-business environment aimed to stimulate revenue opportunities, educate and inspire.

The World of Latino Cuisine Food and Beverage Trade Show, held at the Meadowlands Expo Center, includes the participation of domestic food manufacturers, producers, and distributors. Importers from the Caribbean and many Latin American countries also participate as exhibitors. Matchmaking opportunities are offered off-site and at the event, as ninety-five percent of the largest Latino food and beverage distributors in the Northeastern United States are located within a 25 miles radius of the Meadowlands Expo Center.

The New York Produce Show and Conference is held each year at the Javits Center, NYC, and is presented by the Eastern Produce Council and Produce Business magazine. The 3-day event includes networking opportunities and a tradeshow of over 400 companies representing local retailers, wholesalers, foodservice distributors, urban farmers and unique eateries.

The Fancy Food Show, presented by the Specialty Food Association, showcases over 2,500 exhibitors with the latest in specialty food and beverages from across the U.S. and 55 countries. It is held annually at the Javits Center.

We’ve Got Your Back

Regardless of the type of food business you run, you need to have the financial, accounting and business advice that enables your company thrive in a competitive marketplace. We can help. Contact Managing Partner Maria Rollins at 201.655.7411 or mrollins@krscpas.com to set up a free initial consultation.

Trade-in or sell your vehicle?

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The decision to trade in or sell your vehicle is not so easy if you’ve used that vehicle for business.

Tax implications of trading or selling your vehicleSelling a vehicle outright or trading it in towards a new vehicle usually involves analyzing the economics of the transaction. However, tax factors can start to complicate things if that vehicle was used in your business.

Generally, a gain or loss on the sale of a business asset is determined by the difference between the sales price and basis (your cost for tax purposes). Basis is typically your original cost less depreciation deductions claimed for the asset over the years.

Under the tax-free swap rules, trading an old business asset for a new, like-kind asset doesn’t result in a current gain or loss. The basis in the new asset will be the remaining basis in the old asset plus any cash paid on the deal.

So if your car was used exclusively in business and depreciated down to a zero, or very low basis, trading in the car can avoid current tax. Here is an example:

Mary originally purchased her car for $35,000. The car is used exclusively for business and Mary has deducted depreciation of $33,000 over the years. Mary’s remaining basis is $2,000. Mary has an offer to sell her car for $7,000. If Mary accepts the offer she will have a taxable gain of $5,000. If, however, Mary decides to accept a trade-in of $7,000 for the car she will not recognize any gain. The basis in the new car will be Mary’s basis in the original car ($2,000) plus any cash she paid to trade-up.

Alternately, you would choose to sell the car if the depreciation was limited by annual depreciation dollar caps. In this situation, your basis in the old car may exceed its value. If you sell the car you will recognize a tax loss. If you trade the car in, you would not recognize the loss under the tax free swap rules.

What if you used the standard mileage allowance to deduct car-related expenses?

The standard mileage allowance has a built-in allowance for depreciation, which must be reflected in the basis of the car. For 2016, the deemed depreciation is 24¢ for every business mile traveled. This method may leave you with a higher basis when the car is sold. Therefore, the car should be sold rather than used as a trade-in to recognize the tax loss.

We’ve got your back

At KRS we assist our individual and business clients with all matters related to taxes. If you’re faced with trading in or selling your vehicle, and aren’t quite sure what to do, contact managing partner Maria Rollins at 201.655.7411 or mrollins@krspcpas.com.

People: The First Decision Every Growth Company Must Get Right

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Mike Goldman - President, Performance Breakthrough“A mediocre strategy with A-players executing with discipline will blow away your competition.” – Mike Goldman

The February KRS Insights Breakfast featured guest speaker Mike Goldman, President of Performance Breakthrough, who works with leadership teams to ensure they have the right people, strategies and execution habits for growth.

For those who missed the breakfast, we wanted to share some of Mike’s insights and best practices.

Mike started off by sharing the four decisions CEOs face to drive scale and growth: People, Execution, Strategy and Cash. Of these, decisions about people are by far the most important. Quoting Jim Collins, author of Good to Great, Mike pointed out, “First take care of the who, then the what. If you don’t have the right people, you’re going to be miserable.”

Key insight: A great strategy with the wrong people and/or undisciplined execution will fail every time. It is vitally important to put practices in place so that your company has A-players who can execute effectively.

Who is an A-player?

You may believe you have great players because you’ve worked with them for years. But you probably don’t have as many A-players as you think. For instance, your employee Joe might be a great guy who shows up for work on time, but he’s become complacent in his job and his skills outdated – not what you need in an A-player.

Ask yourself this question: Would you enthusiastically rehire everyone on your team? The answer to this question can mean huge changes within your organization.

Kip Tindell, founder and former CEO of The Container Store, believes one A-player’s productivity equals that of three average employees’ productivity.

Being an A-player, however, is not just about productivity. You must take into account your organization’s core values. “If someone on your team is highly productive, but not living the core values, they are a cancer in your organization,” said Mike. “So a salesperson who beats his or her quota every month but is abrasive to customers is hurting, not helping your organization.”

Determining your organization’s core values

Knowing your organization’s core values – what is best and most noble about your organization – will help you find, retain and leverage A-players. Mike shared three quick tests to help you decide whether something is truly a core value:

  1. Are you committed to firing someone who blatantly, and continually, violates the core value?
  2. Are you willing to take a financial hit to uphold the core value?
  3. Is the core value alive within your organization today? Can you tell recent stories describing how an individual lived the core value?

Answers to these questions can help you establish your organization’s core values. Then use core values to hire – and to fire. “Live your core values – award your team on them,” said Mike.

Finding A-players

Sourcing, recruiting and hiring A-players needs to be your organization’s most important process. Mike shared these best practices for getting started:

Create a virtual bench. Don’t wait until you have an open position to scramble to find someone to fill it. You’ll likely wind up with someone who is not an A-player, just to have a body to fill the position. Always be recruiting.

Best practice: Hold everyone on your leadership team responsible for calling ten people they know and trust to ask them, “We’re growing and always looking for A-players. Who do you know that I should talk to?” The idea is not to hire them right away; you might not need them now and they might not be looking for a job. The objective is to initiate a relationship so that when a need arises, you’ve got a virtual bench of A-players to call.

Upgrade your employee referral program. Typical employee referral programs pay a bonus to the employee who refers someone who eventually gets hired. These programs don’t work because the dollar amounts – typically between $500 and $2,500 – aren’t enough to change someone’s behavior.

“Dramatically increase the bonus amount and split it in two parts,” Mike recommended. “For example, pay a $10,000 bonus. $5,000 when the employee gets hired and another $5,000 in 12 months if both referrer and new employee are still with the company.”

Create A-player ambassadors. A-players tend to know other A-players and can be your best ambassadors, communicating what is best about working for your company.

Plan for your A-players

When you invest so much time and effort in recruiting and hiring A-players, you must have a plan for retaining them as well. Mike advised asking:

  • How can you better leverage their talents?
  • How can you give them more responsibility?
  • How can you re-recruit them to make sure they stay?

You will also need a plan for your C-players. Usually this plan consists of giving them a short period of time to make performance improvements. If they don’t make it happen, they need to go work for your competition.

We’ve got your back

At KRS CPAs our goal is to make it as easy as possible for you to get the advice and counsel needed, so you can focus on what matters most to you. The KRS Insights Breakfast Series offers timely and relevant information from experts like Mike Goldman, who can help you grow your company successfully.

Visit our Insights page to subscribe to our newsletter and you’ll be notified about upcoming breakfasts plus other KRS news, events and resources.

Mike Goldman, who is also author of the book Performance Breakthrough, offers a free online assessment for business leaders to help them determine if they are focusing on the most important issues for their business. You can also contact Mike at mgoldman@performance-breakthrough.com or 201.301.2841.

Key Features of the Proposed Trump Tax Plan

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KEY FEATURES OF THE PROPOSED TRUMP TAX PLANPresident Trump has proposed a detailed tax plan that will revise and update both the individual and corporate tax codes.

Here are some of the key plan elements that could affect individuals and small business owners, if enacted into law.

Top tax rates decrease

Currently the 2017 top tax rate on ordinary income is 39.6%. Under the Trump Tax Plan, the top rate on ordinary income will drop to 33%. He has also proposed lower rates throughout all tax brackets.

More taxpayers will pay the 20% tax capital gains. This 20% rate will kick in for all taxpayers in the top bracket ($127,500 if single and $255,000 if married filing jointly). Currently this rate doesn’t kick in until you earn more than $425,400 if single and $487,650, if married filing jointly.

One tax rate for businesses

Trump plans a single 15% tax rate for business income, whether the business is an S-corporation, partnership or Schedule C. Because sole proprietorships qualify, we may see more wage earners become self-employed business owners.

Under the Trump plan we would also see a 100% expensing of all asset acquisitions, with no limitation.

Capped deductions

For individual taxpayers, Trump is planning an overall limit on itemized deductions of $100,000 if single, and $200,000 if married filing jointly. Currently, itemized deductions are reduced by 3% for every dollar the taxpayer’s income exceeds $250,000 if single, and $300,000 if married filing jointly.

Elimination of the estate tax

Trump has proposed eliminating the estate tax. Still up for discussion is the gift tax or whether the estate tax will be eliminated all at once or phased out over time. Also, there would be no step-up in basis. It is unclear if under Trump’s plan the heirs would take the assets at the decedent’s basis or if appreciation on the assets is taxable at death.

Other key plan features for individuals

The Trump Tax Plan also eliminates:

  • Head of household filing status for single parents
  • Net investment income tax
  • Alternative minimum tax (AMT) for individuals

The plan increases the standard deduction from $6,300 to $15,000 for singles and from $12,600 to $30,000 for married couples filing jointly. It also taxes carried interest as ordinary income.

Other changes impacting businesses

Businesses will need to pay attention to these proposed changes as well:

  • Reduction in the corporate income tax rate from 35% to 15%.
  • Elimination of the corporate AMT.
  • Elimination of the domestic production activities deduction (Section 199) and all other business credits, except for the research and development credit.
  • Implementation of a deemed repatriation of currently deferred foreign profits, at a tax rate of 10%.

We’ve got your back

Of course, these were campaign proposals and we don’t know if they will become law. KRS CPAs will keep you updated on important revisions to the tax code via email radar and blog posts. If you aren’t already registered for our email radars and newsletter, sign up here.

 

2017 NJ Tax Changes Business Owners Need to Know

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NJ Taxes

In my last post I reported on key federal tax changes that small business owners need to know about. This post covers three significant tax changes in New Jersey.

NJ sales tax rates reduced

The New Jersey Sales and Use Tax will be reduced in two phases between 2017 and 2018. The rate decreased from 7% to 6.875% on and after January 1, 2017. The tax rate will decrease to 6.625% on and after January 1, 2018.

Transition rules do apply:

  • For items sold before 1/1/2017 but delivered after 1/1/2017, use the 6.875% rate
  • Leases in excess of 6 months entered into before 1/1/2017, use 7%.
  • Lease extensions or renewals after 1/1/2017, use 6.875%.
  • If an agreement is less than 6 months – use 6.875% for all periods that begin after 1/1/2017.
  • Construction materials delivered after 1/1/2017, use 6.875%.
  • If the construction materials are for use in unalterable building contracts entered into before 1/1/2017, the seller must collect 7%.
  • Service or maintenance agreements entered into before 12/31/2016, seller must charge 7%. This is regardless of whether or not the agreement covers periods after 1/1/2017, unless the bill for such services was issued after 1/1/2017.

KRS Tip: Check all your vendor invoices to ensure you’re being charged the correct amount, before you pay the invoice. If it is the incorrect amount, have the vendor revise the invoice. If you go ahead and pay the incorrect amount, it is your responsibility to go back to the state – not the vendor – to get a refund.

Urban Enterprise Zone designation expires for 5 NJ cities

Under the UEZ designation, businesses in certain economically distressed areas are eligible for incentives, including tax free purchases on capital investments, tax credits to hire local workers and the ability to charge just half the statewide 7% sales tax.

The UEZ designations for Bridgeton, Camden, Newark, Plainfield and Trenton were permitted to expire. These zones can no longer collect sales taxes at reduced rates.

Changes to New Jersey estate tax

A NJ resident who dies and has assets worth more than $675,000 has had his or her estate subject to NJ estate tax. That may sound like a lot of money, but if you own even a modest home in the northern part of the state, you’ll probably hit the $675,000 threshold.

As part of the bill that raised the gas tax in the state, the exemption will increase from $675,000 to $2 million for estates of residents dying on or after 1/1/2017 and before 1/1/2018.

We expect that the increased exemption will change if there is a democratic governor elected this year.

We’ve got your back

New Jersey tax regs grow increasingly complex and it can be hard for business owners to know how to save taxes. At KRS we assist our clients in minimizing tax liabilities by providing them with comprehensive tax planning, preparation and compliance services.

Contact partner Maria Rollins at 201.655.7411 or mrollins@krscpas.com if your company needs expert advice and assistance with its 2016 taxes.

 

2017 Federal Tax Changes Business Owners Need to Know

Posted by Maria T. Rollins on
tips for the 2017 tax season

Tax season is upon us, and with it comes a variety of changes that business owners need to know about. Here’s an overview of some of the most important changes:

New tax filing deadlines

These deadlines apply for 2016 tax filings:

  • C-corporation filings are pushed back to 04/15/17
  • Partnerships, LLCs & S-corporations must file by 3/15
  • Certain 1099 Misc. and W-2’s must be filed with the IRS by 1/31/17

Note that if you are a KRS client, you will receive an email in the next day or so to get you started on your 1099s. Be sure you have all your subcontractor and vendor W-9s completed so that 1099 completion can be done quickly to meet the month-end deadline.

PATH Act eliminates some uncertainty

The Protecting Americans from Tax Hikes Act of 2015 (PATH) enacted at the end of 2015, made permanent many business-related provisions that had been up for renewal, including:

  • 100% gain exclusion on qualified small business stock
  • Reduced, five-year recognition period for S corporation built-in gains tax
  • 15-year straight-line cost recovery for qualified leasehold improvements, restaurant property and retail improvements
  • Charitable deductions for the contribution of food inventory
  • As KRS partner Simon Filip said in Five Ways the PATH Act Can Reduce Your Tax Burden, “The PATH Act is a positive thing for a couple reasons. Any tax savings for small business owners is great. Also, it eliminates some uncertainty, which will make it easier for small businesses to plan their tax liability.”

Good news about the Section 179 tax deduction

Section 179 of the tax code defines the deduction a business can take on the price of qualifying equipment purchased or leased during the tax year. Qualifying equipment could include almost any big-ticket item you need to do business, such as a computer, certain software, office furniture or machinery.

The $500,000 deduction regarding equipment purchases less than $2M now permanent.

R&D credit can help reduce tax liability

New changes in R&D credit allows certain businesses to apply the R&D credit to the AMT or possibly offset payroll taxes. The PATH Act made the R&D tax credit permanent, which is welcome news for businesses investing in research and development.

Update on bonus depreciation

Bonus depreciation is a method of accelerated depreciation which allows a business to make an additional deduction of the cost of qualifying property in the year in which it is put into service.

  • 50% deduction of the costs of new equipment continues through 2019, decreasing to 40% in 2018 and 30% in 2019. Bonus depreciation is set to expire by 2020 unless there is further action by Congress.
  • Replaces the bonus allowance for a qualified leasehold improvement property with a bonus allowance for additions and improvements to the interior of any nonresidential real property, effective for property placed in service after 2015.

Work Opportunity Tax Credit extended

The Work Opportunity Tax Credit gives employers a tax credit when they hire unemployed veterans, food stamp recipients and ex-felons. The PATH Act extends the credit through 2019 with an added 40% credit up to the first $6,000 in wages for employers who hire workers that have been out of work for at least 27 weeks.

Revised repair regulations can increase deductions

The IRS issued final tangible property regulations (aka, the “repair regs”) over three years ago. These regs continue to control the accounting for costs to acquire, repair and improve tangible property. They impact virtually all asset-based businesses and have reverberated into 2016, with additional “clean-up” expected in 2017.

For 2016 year-end planning, work with your accountant to see if either a de minimis expensing safe harbor or a remodel-refresh safe harbor can be applied. Both can yield substantial immediate deductions if followed.

We’ve Got Your Back

Tax laws grow increasingly complex and it can be hard to know how to save taxes. At KRS we assist our business clients in minimizing tax liabilities by providing them with comprehensive tax planning, preparation and compliance services. We’ve also developed resource pages, New Tax Law Explained! for Individuals and for Real Estate Investors, to help you stay on top of what you need to know about the evolving tax codes.

Contact partner Maria Rollins at 201.655.7411 or mrollins@krscpas.com if your business needs expert advice and assistance with its 2016 taxes.