Tag: business

KRS Business Insights Breakfast: Results Z to A

Posted by Maria T. Rollins on

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

Posted by Maria T. Rollins on

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.

Is Your Accountant More than Your Trusted Advisor?

Posted by Loraine Kasprzak on

Is Your Accountant More than Your Trusted Advisor?Managing partner Maria Rollins was a guest on the Accounting Success podcast, speaking on the topic, “How Successful Accountants Serve Their Clients.” In this session excerpt, host Ian Welham and Maria discuss what it means as a CPA to be more than a trusted advisor.

IAN: It’s sometimes said that owning a business can be a lonely world and even that clients can go into their own shell or into their own world. Do you find that once you’ve got a relationship with a client that they tend to reach out to you to help them understand their business, help them avoid that feeling of loneliness…?

MARIA: Sometimes we refer to ourselves as more than just the trusted advisors. Sometimes we’re the psychologist that steps in and listens to what our clients’ issues are even if it goes beyond their business or accounting. I think it’s the fact that our clients know that we really do care about the success of their business, so we can listen to their troubles and their stresses and provide that third-party advice, that independent advice, to help them succeed.

IAN: I think that’s very important. I think you used the word “help them succeed.” Do you find that some clients aren’t actually clear about where they want to go? They got into business. They’ve grown, perhaps, over 10 or 15 years, but they don’t have an end game.

MARIA: We do talk a lot about succession planning for their business. We do talk about buy/sell agreements… We do try to sit down and understand what the goals are. We talk a lot about a three-year plan and a five-year plan so we can help them, guide them. Their business is their biggest asset most times. You want to add value within that asset.

IAN: You have clients not just from New Jersey, but across the U.S. and from around the world. They’re quite diverse in terms of size, ranging from multinational corporations to small, independent businesses. What do you actually look for in a client? What are the things that attract you to the client?

MARIA: The biggest attraction is what we can do to help that client. Where can we actually see some success with what that client needs and how we can match up our talent to get them to that next level and to help them achieve their goals. We do talk a lot about what the client needs are, our understanding of those needs, and how we can help them achieve those goals.

IAN: I think it helps, of course, whether the client’s large or small, that they welcome outside expertise and understand this value.

MARIA: There’s clients that could be a little bit larger that have very different needs. Maybe those clients are more in the need of the traditional accounting services where we’re providing audit assistance or a financial statement assistance. We’ve found very small businesses, and we don’t want to pigeonhole any business based on size, but very small businesses that are very entrepreneurial, they have a very high need and use of technology, and it’s exciting to be part of that growth.

IAN: I noted another expression on your website that caught my attention. I think it was echoed in some of your clients’ testimonials as well. The phrase is: “We’ve got your back.” Can you explain what you mean by that? How does that phrase embody how you serve your clients?

MARIA: The culture here is that we care about our clients’ businesses, sometimes even more than our clients seem to care about their businesses. That’s really where that comes from. You’re focused on your business. You’re in it day-to-day. Sometimes it’s very hard to step back and look at the big picture. We’re there. We’ve got you. We have that big picture in mind. You can count on us for that.

Listen to the entire discussion on YouTube at https://youtu.be/ox6UNUzreXk.

Trade-in or sell your vehicle?

Posted by Maria T. Rollins on

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.

Consider Converting to an S Corporation to Avoid Taxes

Posted by Simon Filip on

Consider Converting to S Corporation to Avoid Taxes

For closely held corporations still taxed as C corporations, the opportunities to avoid future taxes should be considered.

When converting a C corporation to an S corporation there are a number of tax issues that must be addressed.

C corporation vs. S corporation tax rates

A C corporation is taxed on its taxable income at federal rates up to 35%. Distributions of qualified dividends to individual shareholders are taxed again at a federal rate as high as 23.8% (the tax rate on qualified dividends is 15% or 20%, depending on certain adjusted gross income thresholds with an additional 3.8% surtax on net investment income for taxpayers with adjusted gross income over certain thresholds).

If a business elects to be taxed as an S corporation, there is only one level of taxation, at the shareholder level.

Generally, items of income, deduction, gain or loss from a pass-through entity pass through to its owners, while the entity itself is not subject to tax. The S corporation may therefore be favorable as it avoids double taxation.

Not every C corp is eligible

Not every C corporation is eligible to elect to be taxed as an S corporation. The current S corporation eligibility requirements are as follows:

  • No more than 100 shareholders
  • Shareholders who are all individuals (there are exceptions for estates, trusts and certain tax exempt organizations)
  • No nonresident aliens as shareholders
  • Only one class of stock

Mechanics of election

The S election requires the unanimous consent of the shareholders and is effective for any year if made in the prior year or on or before the fifteenth day of the third month of the year. Some states, such as New York and New Jersey, require a separate election be filed, while some states follow the Federal tax classification.

Built-in gains

The excess of the fair market value of the assets over their adjusted basis at the time of the S election is considered “built-in gain.” If any of this built-in gain is recognized during the 5-year period beginning with the first tax year for which the corporation was an S corporation, such gains remains subject to corporate-level tax. Any appreciation of assets that occurs post-S corporation election, is subject to only one level of taxation.

Here’s an example:

XYZ, Inc., a C corporation, was converted to an S corporation on January 1, 2017. On the date of the conversion, it owned real estate with a fair market value of $3 million and an adjusted basis of $2 million. The corporation’s net unrealized built-in gain would be $1 million. If the corporation had taxable income of $1.5 million and sold the real estate asset in 2019, the corporation would be subject to the built-in gains tax of $350,000 ($1 million x 35%). However, if the built-in gain assets were sold in 2023, the built-in gains tax would be a non-issue (zero built-in gain tax), since the fifth year of the recognition period passed.

For more about real estate and C corps, see my post Do You Hold Real Estate in a C Corporation?

Excess passive investment income

If an S corporation was previously a C corporation, it may have accumulated Earnings & Profits (“E&P) from years when it was a C corporation. A potential problem for an S corporation with E&P is the passive investment income tax.

If gross passive investment income (which includes income from interest, dividends, and certain rents) exceeds 25% of gross receipts, the corporation may be subject to tax on its net passive investment income. This is fairly common when a taxpayer makes an S election for a C corporation that owns rental real estate. In a year where an S corporation has both E&P and excess passive investment income, some of the excess net passive investment income may be subject to the tax at the highest corporate income tax rate. This does not apply to a year in which there is no taxable income.

The S corporation will still have a problem if there is no taxable income and the passive investment income tax does not apply. If the S corporation has both E&P and excess passive investment income for three (3) consecutive tax years, the S corporation status is revoked on the first day of the fourth year.

Tax planning can help minimize your taxes

The double taxation of C corporation income is very tax inefficient. With proper tax planning, the owners of a C corporation can minimize their total taxes by converting the corporation to S corporation status. As always, KRS CPAs is here to help you. Contact me at sfilip@krscpas.com or 201.655.7411 for assistance with C corporations and tax planning.

Key Features of the Proposed Trump Tax Plan

Posted by Maria T. Rollins on

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.

 

Cyber-Attacks: Not IF but WHEN

Posted by Maria T. Rollins on

“There are two kinds of companies. Those that have been hacked and those that have been hacked and don’t know it yet.” – Mike Rogers, Former Chairman of the House Intelligence Committee

The December KRS Insights Breakfast featured guest speaker Michelle Schaap, an attorney and cybersecurity expert with Chiesa Shahinian & Giantomasi, who spoke about how to protect your company from cyber-attacks. For those who missed the breakfast, we wanted to share some of Michelle’s eye-opening insights and recommendations.
Protect your company from cyber attacks
Here are some of the many reasons why it is important for your company to start paying attention to cybersecurity:

  • More than 70% of cyber-attacks are against small to medium-sized companies.
  • IRS and other regulations across multiple industries require that you have cyber-insurance.
  • If your company gets hacked, you’re in breach of confidentiality clauses in contracts you have with other entities.
  • Getting hacked can put you in breach of your website’s privacy policy and FTC statutes.

As Michelle pointed out in her talk, timing is everything in detecting a security breach. The average time it takes a company to detect and identify a breach is 20 to 582 days and the average time to contain a breach is 7 to 175 days. “That leaves your company’s ‘Crown Jewels’ exposed for far too long,” she noted.

Data breaches are costly

In 2015, reported losses totaled over $1 billion, according to the Internet Crime Complaint Center. In the U.S., the average cost of a data breach was $217 per record. That means for a breach that involved 5,000 records, your company is looking at $1 million in tangible costs. There are intangible costs as well, such as the cost of business interruption, lost customers and lost trust.

Not surprisingly, 50% of small businesses that experienced a data breach are out of business within the following year.

Preparedness is from the top down

“You should be doing this yesterday,” said Michelle. “The bad actors update malware all the time and you need to keep up with the storm. It’s not once and done.”

She emphasized that the best way to get and stay prepared is to have the commitment to cybersecurity start with your organization’s senior executives. From there, it can work down through the organization from the Chief Information Security Officer (CISO) through the IT department and out to employees and third party vendors. “If your company doesn’t have a CISO, consider bringing in an outside consultant to fill this role. You need to invest in this,” she commented.

Data is everywhere – and needs to be protected

You need to be prepared and protected anywhere you receive, create, store, access, manage, transmit or use confidential or otherwise sensitive data. This includes locations outside your office.

“Wherever sensitive information will be accessed – whether it’s a hotel, Starbucks, or an airport – you need to protect it. The bad actors travel with devices that skim off computers,” said Michelle. “So you need to be mindful about where you are when you access data on your laptop.”

You also need to protect equipment such as copiers, cell phones and other devices, as well as the physical environment and technology which may store sensitive data and be vulnerable to hackers.

Have a plan

Today, more companies are required to have cyber-insurance coverage. To get coverage, you need to have a cybersecurity plan in place that includes policies and procedures for identifying and assessing vulnerabilities, mitigating risk, monitoring and detecting breaches, and responding and recovering from them.

“The day you discover you have been hacked is not the day to figure out how to respond,” said Michelle.

The good news is that you don’t have to figure this all out on your own. There are risk frameworks, such as ISO 27001 and the PCI Security Standards, which can help you prepare your cybersecurity plan. Third party consultants can also assist your firm in planning.

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 Michelle Schaap, who can help you stay knowledgeable and prepared.

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

Michelle Schaap practices primarily in the areas of cybersecurity preparedness and technology, construction law, corporate and commercial transactions, and franchising.

If you are concerned about your organization’s cybersecurity, contact her at 973.530.2026 or mschaap@csglaw.com.

Is your small business prepared for the new employment tax filing deadline?

Posted by Maria T. Rollins on

Be Aware of New W-2 and 1099 Filing Deadlines

In an effort to combat fraud, the Protecting Americans from Tax Hikes (PATH) Act of 2015 was enacted. It revises the filing deadline for Form W-2 and certain types of Form 1099.New Filing Deadlines for W2 and 1099s

Without proper planning, these revisions can cause some real stress for small businesses.

In the past, there were always two dates to consider when filing your employer tax forms. Forms were due to recipients on January 31st and forms were due to the government agencies (IRS and Social Security Administration) on February 28th.

Effective with 2016 tax forms, W-2’s and 1099’s with Box 7 entries are now due by January 31st for both recipient and government agency filings.  Form 1099 box 7 reports non-employee compensation.

In practice, we have found that many businesses do not have correct recipient information for employees and independent contractors, and unfortunately do not realize this until it is time to prepare the recipient copies of the forms. In the past, the issuer had until February 28th to track down or correct any incomplete recipient information.

If you fail to file a correct W-2 or 1099 information return by the due date, and you cannot show reasonable cause, you may be subject to a penalty. There are also penalties if you report an incorrect TIN (taxpayer identification number) or fail to report a TIN. Accordingly, collecting correct information timely is very important.

Complying with PATH

Our recommendations to businesses to assure compliance with the new due dates are as follows:

  • Verify the accuracy of all employee information NOW
  • Review all vendor files NOW and confirm that all applicable files include the vendor’s name, address and TIN
  • Obtain Form W-9, “Request for Taxpayer Identification Number and Certification”, for each new vendor PRIOR to issuing any payment to the vendor
  • Contact all vendors with missing information NOW to allow sufficient time to receive the correct information (it may be difficult to secure the correct information if you no longer do business with the vendor)

Due to the shortened filing deadline between the end of the year and the filing due date, it is essential that you have all the complete and accurate filing information by early January.

We’ve Got Your Back

At KRS we assist our business clients with employer tax reporting as well as tax planning and compliance. Feel free to contact partner Maria Rollins at 201.655.7411 if you have any questions relating to the filing deadlines or any tax compliance issues.

Set the Standard of Value in Shareholder and Partnership Agreements

Posted by Gerald A. Shanker on

 

Set the standard of value in business agreementsDefining “value” can help you avoid negative consequences

Do the valuation provisions of your shareholder or partnership agreement specify a standard of value? If they do, is the standard of value “fair value,” “fair market value,” or something else? If the standard of value is not fair value or fair market value, does the agreement define the standard of value to be used in the event a valuation of the business is required?

The Internal Revenue Service defines fair market value as “The price at which property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.”

Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property and concerning the market for such property.

Depending on the characteristics of the ownership interest being valued, minority and marketability discounts may be applied in valuing the ownership interest under the fair market value standard. The amounts of these discounts are fact sensitive, but discounts between 30% and 40% are not uncommon.

The impact of Brown v. Brown

The fair value standard was created in New Jersey in the case of Brown v. Brown 348 N.J. Super. 466, which is basically fair market value without discounts. The Court’s logic in this divorce case was that since the business was not being sold, the nontitled spouse should not suffer discounts in the distribution of marital property.

I have also been involved in a situation in which the agreement used the term “value” without definition. The parties in that dispute spent a significant amount of money on professional fees that resulted in an arbitrator deciding on a definition.

As you can see, the use of the single word “market” in the standard of value may have a huge impact on the valuation result. What does your agreement say, and is that what you intend?  Although discussing this issue and updating business agreements may be uncomfortable for some, it is far better than ignoring this issue, because doing so may very likely end up in litigation.

Cybersecurity Mistakes You Cannot Afford To Make

Posted by Maria T. Rollins on

Companies can’t afford to be asleep at the wheel when it comes to protecting personal and corporate data. Below are the five common mistakes you can’t afford to make when it comes to protecting assets from cyber-attacks.

Mistake #1: Assuming you’re not a target

Protect yourself from cyber attacksWhether large or small, organizations in every industry are vulnerable to attack. The stories that make the news headlines are usually about theft of credit card data or personal identity information. As a result, companies that don’t handle this type of data often believe they are not a target. All companies need to recognize this risk and work to detect and prevent the devastating damage cyber-attacks can cause. While developing your plan, consider your organization’s response if it does happen to you. This will help you react faster and potentially minimize the negative effect of a data breach.

Mistake #2: Approaching security as just an IT Issue

Many attacks come from the inside of an organization as a result of misuse, theft or loss of devices. A company-wide security policy including employee education, policies and procedures should be developed specifically for your business operations and employee device usage. Regular “audits” of the policies should be conducted to ensure compliance at all levels within the organization.

Mistake #3: Neglecting to understand and update your network

Organizations may never be able to prevent every attack; networks are too expansive and there are many opportunities to breach software. However, failing to understand the structure of your company’s network and where company data flows to and from will prevent you from knowing what to protect. Once you have determined what needs to be protected and systems are in place to protect your data, continued monitoring, testing and updating is necessary to avoid an increased opportunity to invade your systems.

Mistake #4: Relying on anti-virus technologies

Anti- virus technologies are very helpful but are not sufficient to prevent advanced attacks. Hackers are at their game non-stop and have evolved their tactics faster than anti-virus technologies can react. Updates to anti-virus and malware software are necessary, but strong data security policies, testing and monitoring are also needed.

Mistake #5: Failing to use strong passwords

Passwords should be unique and complex. It is easy to use the same password for many different applications and quite often this is what many people do. The cyber attackers know this. Unique passwords for each application are best. Your passwords should be complex. Never use words like “password” or “football”. “12345” is not a good password either. Your password should contain a combination of letters (upper and lower case), numbers, capital letters and symbols. Phrases using symbols, for example Th3king&! (The king and I) is a way to remember a complex password.

As you can see there is no one security solution to protecting your company’s data. Data security must consider the data and system as well as internal and external users. Your plan should also consider your plan of action if there is a cyber-attack and breach of company data. A good action plan can limit the exposure and damage a data loss may cause.