Business owners are now reviewing the repercussions of the Tax Cuts and Jobs Act of 2017 or are planning to do so soon. Learning about how these changes will affect your business is an important step to take now in strategic business and tax planning for the years to come. While the majority of the Act’s key criteria are beneficial to businesses, there are several changes that affect only certain types of businesses, and other changes that affect the overall method of accounting a business can use. Perhaps one of the most significant changes made in the new tax overhaul is that more businesses can utilize the cash method of accounting.
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With its effect being immediate and unanswered questions lingering, the Tax Cuts and Jobs Act largely eliminates the deduction for entertainment expenses, and businesses should incorporate this change without delay.
Under the prior law, taxpayers were able to deduct 50% of expenses incurred for entertainment, amusement, or recreation directly related to the active conduct of a taxpayer’s business or trade. The new law, however, generally eliminates the deduction for expenses paid or incurred after December 31, 2017. Although there are a few exceptions, entertainment expenses are non-deductible as of January 1, 2018. It has been made clear that a deduction is not permitted for a client entertaining at sporting events, on the golf course, or any similar entertainment expense. What is less clear, though, is how food and beverage expenses or meals are affected. The Joint Committee on Taxation (JCT) stated “taxpayers may still generally deduct 50% of food and beverage expenses associated with operating a trade or business;” however, the JCT did not define what expenses are associated with “operating a trade or business” other than it would include meals provided to employees traveling for work. It is still unclear whether food and beverage expenses incurred in connection with an entertainment event will remain 50% deductible.
With the most extensive overhaul of the U.S. tax code in more than three decades having now been passed by both Houses of Congress, and officially signed by President Trump to enact it into law, tax reform is here. These changes will require businesses and individuals to re-evaluate their long-term tax strategies starting in the 2018 tax year, but also means taking immediate year-end tax planning strategies for the final days of 2017 into consideration.
A few years ago, I attended the Winning is Everything conference put on by the Advisory Board in Las Vegas, NV. A fitting place for a conference about winning! There are so many topics to consider when choosing a conference, and I end up attending several a year to stay up with professional trends, pronouncements and the latest in technology for my profession: Accounting, of course. Though truth be told, I don’t consider myself much of an accountant in the traditional sense. Not to worry, I’m not having a crisis of identity. I just believe that there is a better description out there for what I do and what we do as a firm.
We’re going back in time with this one, I’m looking at Super Bowl XLVIII in 2013 between the Denver Broncos and the Seattle Seahawks. The Seahawks came out on top with a whooping 43-8 score. I’m not generally a big sports fan. I don’t keep stats or play on fantasy leagues. But I DO come from a college town–Knoxville, home of the Tennessee Volunteers, and most of Knoxville loves to follow Peyton Manning. I am no exception. When he is on his game, whether you love or hate him, he is unstoppable. There is no denying it. The night of Super Bowl XLVIII he and most of his team were not on their game, or they were thrown off their game, or, even worse, they threw themselves off of their own game.
I’m going to take the middle-of-the-road approach here and say it was a combination of all three. What was interesting to watch, as long as I could bear to watch, was just how quickly the morale and energy left the Broncos. They were so low even Life Alert couldn’t pick them up.
On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation.
As employers have been scrambling to review job descriptions and salaries before the December 1, 2016 deadline, a US Court judge puts the Department of Labor’s rules on hold. A group of states filed a lawsuit stating that the Department of labor’s OT rule overstepped the government’s authority.
I’ve heard this phrase many times over the years: “All growth starts with the truth.” It is such a simple concept. Be honest about where you and your business really are, and decisions can be made that truly make a difference. Whether those decisions ease a pain or propel you to the next level, if you aren’t really honest with yourself, or your team, about where you really are right now in reality, then any change instituted may not have the intended impact. And, in fact, could have negative repercussions for you or your business.
Especially where you have a multiple owner scenario or an entrenched management team, the truth is sometimes hard to come by. Why? Well, there are always egos that have to be checked, but beyond that it comes down to perception vs. reality. Each person’s perception is their own reality, and many times those perceptions do not align. So, it takes some real digging to get perceptions aligned to what the real reality is.
When a business pays non–employee compensation aggregating to $600 or more to a single payee in a tax year, the business must file a Form 1099-MISC to report the payments to the IRS. Similarly, employers must report wages paid to employees on Forms W-2. Copies of these forms (called payee statements) must also be supplied to payment recipients.
Before a law passed last year, Forms 1099-MISC and W-2 were required to be filed with the IRS and the Social Security Administration (SSA) by the last day of February or by March 31 if filed electronically. Now, the due dates have been accelerated.
All that we have done, are doing, or will do, is based upon 1 common element. PEOPLE!
Our business, your business, me, you, us, our team, all represent our “Internal people.”
WE ARE our Human Resources. We are HUMAN CAPITAL to one another.
Those we serve – our clients, networking partners, government agencies, our community – they represent our “external people”: Our market, our partners in service, our friends, our family. All of these are also our HUMAN CAPITAL. Of course, external people are also made up of competitors; some people who may challenge our existence, or wish to harm us. So, just as there is risk in monetary investing, there is risk in “raising and utilizing” our Human Capital.