Tax Break Extender Package Approved By Congress
Mar 24, 2016
At the end of last year, Congress continued its tradition of passing an “extender package.” Typically, the year-end packages extend various tax benefits for one year only, but this most recent legislation — the Protecting Americans from Tax Hikes (PATH) Act of 2015 — extended many benefits for longer periods, and in some cases, permanently.
Individuals
Following are some of the more important provisions affecting individual taxpayers:
State and local sales taxes. The new law permanently extends the provision allowing taxpayers to take an itemized deduction for state and local sales taxes rather than state and local income taxes. This provision may be useful to individuals who live in states with no income tax or who have purchased an expensive item, such as a car.
American Opportunity Tax Credit. Also made permanent is the tax credit of up to $2,500 per year for the payment of qualified tuition and related expenses for the first four years of post-secondary education. The credit is subject to phaseout based on income level.
Higher education expense deduction. This provision allows eligible individuals to deduct up to $4,000 or $2,000 (depending on income) of qualified tuition and related expenses. Because the deduction is “above the line,” taxpayers do not need to itemize to take it. The deduction is extended for 2015 and 2016.
Nontaxable IRA charitable transfers. Under this provision, now permanent, individuals age 70½ or older may exclude from gross income up to $100,000 per year for direct transfers from their individual retirement accounts to qualifying charities. If all requirements are met, such contributions also count toward the taxpayer’s required minimum distributions.
Businesses
Among other changes, the PATH Act of 2015 provides more generous write-offs for qualifying fixed asset purchases:
Higher Section 179 limit. Effective for the 2015 tax year, the new law makes permanent the $500,000 limit on the cost of machinery, equipment, and other eligible property that businesses may expense each year. The election is subject to a dollar-for-dollar phaseout once the cost of expensing-eligible property exceeds $2,000,000.
“Bonus” first-year depreciation. Thanks to the new law, businesses will continue to have the option of deducting 50% of the cost of qualifying property (e.g., most machinery and equipment) in the year the property is placed in service. The 50% “bonus” depreciation percentage is available for 2015, 2016, and 2017. The percentage drops to 40% in 2018 and to 30% in 2019.
Categories: Other Resources
Must Have Apps for this Farming Season
Mar 22, 2016
Technology has grown by leaps and bounds within the last several years. It is important, no matter what your profession, to make use of improved technology to better your business. Smart phone applications can be extremely beneficial for agricultural-based careers such as farming. Since farmers are constantly on the move during their busy seasons of planting and harvesting, smart phone apps provide mobility and allow farmers to remain up-to-date on items that may influence their crops.Here are just a few apps which may be of interest to agribusiness .
AgWeb – This free app is run by the Farm Journal and helps Farmers stay up-to-date on a variety of items such as market quotes, weather patterns, and recent agricultural articles. Users also have the option to listen to several top industry radio shows including AgriTalk.
FarmLogs – Another free app available for apple and android devices which allows users to maintain various logs from events which occur in the field, task lists, rainfall tracking, to managing inventory. Multiple users can log information, allowing everyone to see updates in real-time.
TractorHouse – This free app is similar to Autotrader for farm equipment. Farmers can sell farm equipment, parts, and equipment attachments. Some nice features are the ability to narrow a search by location and adding items to your “watchlist” for easy maneuvering.
Weed ID – There are several free apps for weed identification including those powered by BASF, Monsanto, or the University of Missouri. No matter which one you choose, these are excellent apps to aide in the quick identification of weeds and how to best treat an infected field.
CheckIt – This app allows farmers to narrow down what deficiencies are apparent in a given crop and provides recommendations for improvement. One great feature to this app is its ability to function without a strong tower signal. Hence, farmers will never be “stuck in the mud” with this app not working.
Do you use any of these applications? Are there others you believe to be extremely beneficial?
By: Ellie Herr, Staff Accountant
Categories: Agribusiness
The Role of The Cost Accountant
Mar 21, 2016
As a cost accountant, it is not uncommon to encounter individuals who are unfamiliar with cost accounting and what our profession entails. I hear “you must enjoy numbers” or “I bet you are great at math”. There is so much more involved in cost accounting. I would not consider it math in the truest sense, but really more analysis and critical thinking. The unawareness of cost accounting is typical among the general public. However, what about a business owner? Does the owner of the business your work for truly understand what cost accounting is?
If you answered yes, then I believe you are in the minority. Why do you think this is the case? Do you consider it an issue?
Some cost accountants may feel if no one understands what they do, then why do it. Others believe it is a free pass because no one will know otherwise. However, I believe if no one recognizes the value you offer, the responsibility falls on you. You are the only one who understands the importance of accurate costing data and the value it brings to any business.
It can be discouraging when those running a business do not fully comprehend the importance of your role. However, if view the situation from a new perspective and see they believe you are then you make a positive impact.
Cost accounting has one of the most unique perspectives in a business. You control some of the most insightful information which can ultimately make or break your organization. Having the ability to observe trends before they occur allows for predictability which can be life changing. Recognize the fact that the owner does not need to understand how you know what you know, but it is much more critical for them to trust in you and the validity of the information.
In the end, I do not think it matters if everyone understands exactly what you do. What matters most is they respect what you do and recognize the value and necessity of the information you provide. What experiences have you had and what is your opinion?
Categories: Cost Accounting
Business Continuity Plan
Mar 17, 2016
What if disaster strikes your practice? An estimated 25% of businesses don’t reopen after a major disaster strikes.* Having a business continuity plan can help improve your odds of recovering.
The basic plan
The strategy behind a business continuity (or disaster recovery) plan is straightforward: Identify the various risks that could disrupt your practice and look at how each operation could be affected and identify appropriate recovery actions.
Make sure you have a list of employees ready with phone numbers, e-mail addresses and emergency family contacts for communication purposes. If any of your employees can work from home, include that information in your personnel list. You’ll need a similar list of customers, suppliers and other vendors. Social networking tools may be especially helpful for keeping in touch during and after a disaster.
Risk protection
Having the proper insurance is key to protecting your practice — at all times. In addition to property and casualty insurance, most small businesses carry disability, key-person life insurance and business interruption insurance. And make sure your buy-sell agreement is up to date, including the life insurance policies that fund it. Meet with your financial professional for a complete review.
Maintaining operations
If your building has to be evacuated, you’ll need an alternative site. Talk with other business owners in your vicinity about locating and equipping a facility that can be shared in case of an emergency. You may be able to limit physical damage by taking some preemptive steps (e.g., having a generator and a pump on hand).
Protecting data
A disaster could damage or destroy your computer equipment and wipe out your data, so take precautions. Invest in surge protectors and arrange for secure storage by transmitting data to a remote server or backing up daily to storage media that can be kept off site.
Protecting your business
If you think your practice is too small to need a plan or that it will take too long to create one, just think about how much you stand to lose by not having one. Meet with your financial professional for a full review.
- www.sba.gov/content/disaster-planning
Categories: Healthcare & Dentistry
Business Growth & Investing in Talent
Mar 16, 2016
I recently met with a long time friend who also happens to be the CFO of a large manufacturing corporation in Northern Ohio. We discussed some of the business changes occurring as the result of increased sales growth in his area. His organization started 10 years ago with sales of around $50 million and it is currently he track to reach $100 million in sales in the next few years.
Drastic sales growth offers tremendous opportunities, but there are paralleling challenges which are equally as large. The individuals who started the business had unique talents and motivations which set the stage for growth. Their quality product combined with exceptional customer service laid the foundation for success and set the stage for future growth. Every area of the business had dedicated employees with the necessary skills and the experience to ensure the company would be successful at the beginning and have the capacity to pursue additional growth.
As the company grew, the level of complexity in virtually every department of the company grew proportionately. Hence, the talents of the newly hired employees were developing to include more sophisticated skills necessary to maintain the company’s current market position. As a result, many of the founding members were unable to provide the guidance necessary to keep the company growing, profitable and able to expand. In spite of having loyal, hard-working employees, it became necessary to hire additional staff with the experience and training necessary to allow the company to continue to grow.
For example, the company engineers, who had been there since inception, were experts in the engineering concepts required for actual production. However, when a new engineer with extensive experience with larger companies arrived, it became clear that there were issues which needed resolution but there were not even on the team’s radar screen. My friend described how the topics in the engineering meetings have changed dramatically since the new engineer joined the team. They are now focused on level of activity and maintaining the company’s productivity to remain competitive in the marketplace. The basic engineering requirements have not changed but instead have become more sophisticated to keep production at the level of $100 million annually.
He concluded that unless businesses are willing to invest in new talent as the company grows, they will soon be antiquated and unable to fully capitalize on the opportunities and exploit the market properly. This is true not only in the production and engineering areas, but in all the supporting areas such as marketing, sales, accounting, administration, and personnel. Every area has growth-related challenges and opportunities, and only individuals trained and experienced in how those can best be met have the tools to fully benefit the company. Talent acquisition can ultimately play a significant role in your business development.
Categories: Cost Accounting