Category Archives: Raleigh CPA Firm

SBA loans may be more difficult than we thought

Small businesses looking to get some relief from the Payroll Protection Program may run into a snag or two.  Because this stimulus package was passed so quickly, the banks are not necessarily prepared to handle the loans like the media initially described.  This article from Fortune provides some additional insight.

If you are a small business looking to apply for one of these loans, here is a link to help you find a lender along with a sample application.

We understand how difficult this time is for you.  If we can be of any assistance, we will be happy to help!  Please contact our office if you have questions or would like to know more about other COVID-19 relief options.

PRESS RELEASE: NC Deferring Interest

FOR IMMEDIATE RELEASE                                        Contact: Joseph Kyzer<mailto:joseph.kyzer@ncleg.net>

Tuesday, March 31, 2020

 

North Carolina Leaders Announce Shared Support for Deferring Interest on Income Tax Until July 15

Raleigh, N.C. – North Carolina leaders announced shared bipartisan support for deferring the accrual of interest on state income taxes filed before July 15, 2020, in a joint statement released by General Assembly lawmakers and Governor Cooper on Tuesday.

View on SpeakerMoore.com<http://speakermoore.com/north-carolina-leaders-announce-shared-support-deferring-interest-income-tax-july-15/>

The deadline for state and federal tax filings were recently delayed to July 15, 2020, and penalties for late payments were also waived.

However, the North Carolina General Assembly and Governor must approve legislation to defer accrual of interest on income taxes, an action that state leaders announced shared support for approving retroactively on Tuesday.

State Senate Democratic Leader Dan Blue (D-Wake), Senate Leader Phil Berger (R-Rockingham), House Speaker Tim Moore (R-Cleveland), and House Democratic Leader Darren Jackson (D-Wake) released a joint statement with Governor Cooper on Tuesday.

“One of the biggest questions we are getting on economic issues is whether families and businesses will be responsible for paying interest on their income taxes now that the filing deadline is delayed,” the five state leaders said in a joint statement Tuesday.

“Today, we can announce our shared support for retroactively waiving the accrual of those interest payments to provide further tax relief for North Carolinians amid the COVID-19 crisis, an important step to offer certainty and recovery assistance for millions of our state’s residents.”

Under North Carolina law, the liability for failure to pay estimated income tax on time is the accrual of interest. The Secretary of the Department of Revenue is not authorized to waive interest and the agency is required to charge interest on any unpaid tax.

Therefore, the General Assembly and Governor must approve legislation to ensure taxpayers are not liable for such interest between April 15, 2020, and July 15, 2020, the extended deadline.

____________________________________________________________________________________

NORTH CAROLINA GENERAL ASSEMBLY

Legislative Building | 16 West Jones Street | Raleigh, NC 27601 | 919-733-4111

 

COVID-19 Links

In an effort to streamline the ever-changing world we live in with the COVID-19 virus, here are some links that are all related to updated tax changes, small businesses, individual sick leave, and other filing requirements.  As more information is released, it will be added at the top of this list.

 

 

 

Have you been using zoom?  https://www.forbes.com/sites/leemathews/2020/04/13/500000-hacked-zoom-accounts-given-away-for-free-on-the-dark-web/#58a7fbc858c5

US Dept of Treasury Grants Additional Income Tax Filing and Payment Relief https://www.irs.gov/pub/irs-drop/n-20-23.pdf

New NonProfit Extensions https://home.treasury.gov/news/press-releases/sm970

CDC Recommendations https://www.cdc.gov/coronavirus/2019-ncov/index.html

COVID-19 Relief Tracker https://www.forbes.com/sites/briannegarrett/2020/03/20/small-business-relief-tracker-funding-grants-and-resources-for-business-owners-grappling-with-coronavirus/#1e1e001bdd4c

There’s hope for Small Businesses! https://www.wraltechwire.com/2020/04/03/bank-of-america-accepting-virus-crisis-loan-applications-receives-10000-in-first-hour/

Key Highlights of the CARES Act and the FFCRA Relief Provisions https://www.langdoncpa.com/?p=4717&preview=true

SBA loans more difficult than we thought https://www.langdoncpa.com/2020/04/03/sba-loans-may-be-more-difficult-than-we-thought/

Employer tax credits, and more https://www.journalofaccountancy.com/news/2020/apr/irs-new-employer-tax-credits-form-employee-retention-credit-guidance-coronavirus.html

More Assistance for Nonprofits https://www.councilofnonprofits.org/trends-policy-issues/loans-available-nonprofits-the-cares-act-public-law-116-132

NC Press Release: Deferred Interest https://www.langdoncpa.com/2020/04/01/press-release-nc-deferring-interest/

Applications for Small Business Paycheck Protection Program https://www.journalofaccountancy.com/news/2020/mar/paycheck-protection-loan-for-small-businesses-coronavirus-pandemic.html

Employer questions answered! https://www.dol.gov/agencies/whd/employers

SBA debt relief related to COVID-19 https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources#section-header-4

Gift tax returns extended too! https://www.journalofaccountancy.com/news/2020/mar/gift-gst-tax-returns-postponed-filing-deadlines-coronavirus-pandemic.html

Assisted Living Resources for COVID-19 https://www.ncala.org/covid-19.html

How much COVID-19 stimulus will I receive? https://www.cnbc.com/2020/03/27/the-stimulus-payment-calculator-tells-you-how-much-money-you-could-get.html

Possible Increase for VA Nursing Facilities https://www.vhca.org/publications/careconnection/march-26-2020/vhca-vcal-seeking-additional-funding-for-nf-care-under-covid-19-emergency/

COVID-19 Resources for Non-Profits https://www.ncnonprofits.org/resources/pandemicresources

The CARES Act questions answered https://www.journalofaccountancy.com/news/2020/mar/cares-act-economic-relief-coronavirus-tax-provisions.html?utm_source=mnl:alerts&utm_medium=email&utm_campaign=25Mar2020&utm_content=headline

NC DHHS provides additional COVID-19 support https://www.ncdhhs.gov/news/press-releases/nc-medicaid-increases-support-protect-those-most-risk-serious-illness-covid-19

Clarification on NC Tax Deadlines https://www.ncacpa.org/wp-content/uploads/2020/03/Frequently-Asked-Questions-COVID-final.pdf?utm_source=Google&utm_medium=Referral&utm_campaign=NCACPA&_zs=fG9HX&_zl=MMK22

Employers using Payroll Tax Credits for Paid Leave due to Coronavirus https://www.accountingtoday.com/news/employers-can-begin-using-payroll-tax-credits-for-paid-leave-for-coronavirus

CMS extends Cost Report Deadlines https://www.palmettogba.com/palmetto/providers.nsf/ls/JM%20Part%20A~BMYLSN5443?opendocument&utm_source=J11AL&utm_campaign=JMALs&utm_medium=email

Small Business Q&A https://sbshrs.adpinfo.com/covid19-faqs

IRS push back tax FILING deadline https://abc11.com/business/tax-day-pushed-back-amid-viral-outbreak-mnuchin/6031749/

Bill to address paid sick leave related to COVID-19 (FFCRA) https://www.forbes.com/sites/tomspiggle/2020/03/17/the-families-first-coronavirus-response-act-what-it-does-for-employees-who-need-paid-sick-leave/#615dd2f06f1a

HUD and Single Audit Extension https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-17.pdf?utm_medium=email&SubscriberID=111017000&utm_source=GAQC20&Site=AICPA&LinkID=8741972&utm_campaign=GAQC_AlertMAR20&cid=email:GAQC20:GAQC_AlertMAR20:https%3a%2f%2fwww.whitehouse.gov%2fwp-content%2fuploads%2f2020%2f03%2fM-20-17.pdf:AICPA&SendID=266068&utm_content=A20MAR400_GAQC_Alert401

IRS Press Release “Payment Relief” https://www.langdoncpa.com/2020/03/19/official-guidance-for-tax-deadlines/

Single Audit Submission Info https://www.whitehouse.gov/wp-content/uploads/2020/03/M-20-11.pdf

US Department of Labor defines FMLA related to COVID-19 https://www.dol.gov/agencies/whd/fmla/pandemic

IRS extends PAYMENT deadline https://www.cnbc.com/2020/03/17/treasury-and-irs-to-delay-tax-deadline-by-90-days.html

https://www.cpapracticeadvisor.com/tax-compliance/news/21129660/2020-tax-season-payment-deadline-extended-to-july-15-as-nation-fights-coronavirus-irs-news?utm_source=CPA+Other+Communications&utm_medium=email&utm_campaign=CCSN200317002&o_eid=9442A3978623C7T&rdx.ident=[object+Object]

 

Official Guidance for Tax Deadlines

From IRS Press Release:

March 18, 2020

The Treasury Department and the Internal Revenue Service are providing special payment relief to individuals and businesses in response to the COVID-19 Outbreak. The filing deadline for tax returns remains April 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.

This payment relief includes:

Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.

Corporations: For C Corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.

The IRS reminds individual taxpayers the easiest and fastest way to request a filing extension is to electronically file Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses must file Form 7004.

This relief only applies to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020, not state tax payments or deposits or payments of any other type of federal tax. Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details. More information is available at https://www.taxadmin.org/state-tax-agencies.

5 ways to strengthen your business for the new year

The end of one year and the beginning of the next is a great opportunity for reflection and planning. You have 12 months to look back on and another 12 ahead to look forward to. Here are five ways to strengthen your business for the new year by doing a little of both:

1. Compare 2019 financial performance to budget. Did you meet the financial goals you set at the beginning of the year? If not, why? Analyze variances between budget and actual results. Then, evaluate what changes you could make to get closer to achieving your objectives in 2020. And if you did meet your goals, identify precisely what you did right and build on those strategies.

2. Create a multiyear capital budget. Look around your offices or facilities at your equipment, software and people. What investments will you need to make to grow your business? Such investments can be both tangible (new equipment and technology) and intangible (employees’ technical and soft skills).

Equipment, software, furniture, vehicles and other types of assets inevitably wear out or become obsolete. You’ll need to regularly maintain, update and replace them. Lay out a long-term plan for doing so; this way, you won’t be caught off guard by a big expense.

3. Assess the competition. Identify your biggest rivals over the past year. Discuss with your partners, managers and advisors what those competitors did to make your life so “interesting.” Also, honestly appraise the quality of what your business sells versus what competitors offer. Are you doing everything you can to meet — or, better yet, exceed — customer expectations? Devise some responsive competitive strategies for the next 12 months.

4. Review insurance coverage. It’s important to stay on top of your property, casualty and liability coverage. Property values or risks may change — or you may add new assets or retire old ones — requiring you to increase or decrease your level of coverage. A fire, natural disaster, accident or out-of-the-blue lawsuit that you’re not fully protected against could devastate your business. Look at the policies you have in place and determine whether you’re adequately protected.

5. Analyze market trends. Recognize the major events and trends in your industry over the past year. Consider areas such as economic drivers or detractors, technology, the regulatory environment and customer demographics. In what direction is your industry heading over the next five or ten years? Anticipating and quickly reacting to trends are the keys to a company’s long-term success.

These are just a few ideas for looking back and ahead to set a successful course forward. We can help you review the past year’s tax, accounting and financial strategies, and implement savvy moves toward a secure and profitable 2020 for your business.

© 2019

Does your team know the profitability game plan?

Autumn brings falling leaves and … the gridiron. Football teams — from high school to pro — are trying to put as many wins on the board as possible to make this season a special one.

For business owners, sports can highlight important lessons about profitability. One in particular is that you and your coaches must learn from your mistakes and adjust your game plan accordingly to have a winning year.

Spot the fumbles

More specifically, your business needs to identify the profit fumbles that are hurting your ability to score bottom-line touchdowns and, in response, execute earnings plays that improve the score. Doing so is always important but takes on added significance as the year winds down and you want to finish strong.

Your company’s earnings game plan should be based partly on strong strategic planning for the year and partly from uncovering and working to eliminate such profit fumbles as:

  • Employees interacting with customers poorly, giving a bad impression or providing inaccurate information,
  • Pricing strategies that turn off customers or bring in inadequate revenue, and
  • Supply chain issues that slow productivity.

Ask employees at all levels whether and where they see such fumbles. Then assign a negative dollar value to each fumble that keeps your organization from reaching its full profit potential.

Once you start putting a value on profit fumbles, you can add them to your income statement for a clearer picture of how they affect net profit. Historically, unidentified and unmeasured profit fumbles are buried in lower sales and inflated costs of sales and overhead.

Fortify your position

After you’ve identified one or more profit blunders, act to fortify your offensive line as you drive downfield. To do so:

Define (or redefine) the game plan. Work with your coaches (management, key employees) to devise specific profit-building initiatives. Calculate how much each initiative could add to the bottom line. To arrive at these values, you’ll need to estimate the potential income of each initiative — but only after you’ve projected the costs as well.

Appoint team leaders. Each profit initiative must have a single person assigned to champion it. When profit-building strategies become everyone’s job, they tend to become no one’s job. All players on the field must know their jobs and where to look for leadership.

Communicating clearly and building consensus. Explain each initiative to employees and outline the steps you’ll need to achieve them. If the wide receiver doesn’t know his route, he won’t be in the right place when the quarterback throws the ball. Most important, that wide receiver must believe in the play.

Win the game

With a strong profit game plan in place, everyone wins. Your company’s bottom line is strong, employees are motivated by the business’s success and, oh yes, customers are satisfied. Touchdown! We can help you perform the financial analyses to identity your profit fumbles and come up with budget-smart initiatives likely to build your bottom line.

© 2019

Employer Shared Responsibility Penalties

by Tony Pandiscia

The Internal Revenue Service “IRS” has recently been issuing “226J Letters” to businesses to conduct inquiry into whether compliance was properly maintained under the Affordable Care Act [“ACA”] for the 2016 Tax Year.  While the IRS has been authorized to issue this correspondence in the past, the 2016 Tax Year is significant because it marks the first year following the sunset of favorable “transitional relief” rules that had been available in prior years for businesses that were not in compliance with the ACA.  When a business is not in compliance with the ACA healthcare mandate, the result is exposure to the “employer shared responsibility penalty” [or “ESRP”].

A business may incur the “ESRP” under the ACA when it is an applicable large employer [“ALEs”] whom fails to offer:

  • “minimum essential” health insurance coverage to its full-time employees and their children, or
  •  insurance coverage that is “considered affordable”.

Technical rules help determine exactly whom is an ALE [i.e. how to properly count the “full-time equivalent” employees], what would be considered “minimum essential” [health insurance coverage], as well as whether the premiums charged employees were “considered affordable”.  Most businesses confronted the myriad of health insurance options designed to meet ACA compliance beginning back in 2013 when the law was initially announced, although various provisions of the law effectively delayed the assessment of penalties until after January 1, 2015 to give businesses ample time to implement suitable health insurance programs and permit the IRS opportunity to develop adequate record keeping and tracking mechanisms.

It is important to understand that receipt of a the 226J Letter is not the actual assessment of the liability.  Instead it is a notification from the IRS that based on certain records in its database, the business may be subject to the ESRP and the business now has the responsibility to formally contest or confirm the assertion.  [Typically the records the IRS has analyzed include Forms 1094, 1095, W-2 along with the Premium Tax Credit database that is populated through the “Exchange” where individuals obtained coverage through “Healthcare.gov”.]  The formal response to the 226J Letter must be submitted to the IRS using Form 14764, plus attachments.  Included in the 226J Letter will be a “response deadline” [generally 30 days from the date of the letter] for which a business owner must submit the response or by default the IRS will assume no additional evidence is available to refute the ESRP assertion.

Due to the complexity and time-constraints involved, upon receipt of a 226J Letter a business owner should immediately contact a Tax Professional to assist with the response process.  The format of the Form 14764 allows for submission of explanations and substantive documentation that may help update or correct the IRS’ records, as well as counter (if applicable) the government’s ESRP assertion.  As with other IRS dispute resolution matters, reliance on a qualified Tax Professional will permit the business owner to avail him/herself of all applicable ESRP response strategies (including extensions of time, available exemptions, review of formula computations and ratios, and even installment payment plan negotiation attempts, as necessary).  Langdon & Company LLP is well-versed in ESRP issues, so feel free to connect with us if you have any questions.

NC Medicaid Compliance Update

by Rachel Owens

North Carolina requires program-specific reporting of facilities/homes based on their license. For many facilities this is not a new requirement, however, for adult care, mental health and dual-licensed facilities this is only required every other year.  This year is an on year.  Compliance with these state requirements fulfill the mandate enforced by the North Carolina General Assembly under General Statute 131 D-4.1-4.3 through the Office of the Controller.  Facilities that do not receive funds through State/County Special Assistance are exempt, but all others must complete a cost report.  The deadline for which, is just a few short months away – September 30, 2019!

What report is my facility required to file?

Requirements of the statute vary depending on the license and the number of beds in the facility.  Facilities with 6 beds or less are required to prepare a cost report only.  Facilities with 7 or more beds must complete a cost report and have agreed-upon-procedures performed by an independent CPA.  The larger facilities with 31 beds or more have additional requirements for their cost report this year.

There are many factors to consider to determine exactly what is expected of each facility and what period is to be reported.  The repercussions of non-compliance of these requirements are suspended admissions or worse!  The OOC office anticipates releasing updated cost report information and agreed-upon-procedures in the next few weeks.  The healthcare industry continues to be an ever-changing environment and we continue to be on the look out for additional information as the deadline approaches.  We would be happy to answer any questions you have and would appreciate the opportunity to serve your organization.

 

Financial statements tell your business’s story, inside and out

Ask many entrepreneurs and small business owners to show you their financial statements and they’ll likely open a laptop and show you their bookkeeping software. Although tracking financial transactions is critical, spreadsheets aren’t financial statements.

In short, financial statements are detailed and carefully organized reports about the financial activities and overall position of a business. As any company evolves, it will likely encounter an increasing need to properly generate these reports to build credibility with outside parties, such as investors and lenders, and to make well-informed strategic decisions.

These are the typical components of financial statements:

Income statement. Also known as a profit and loss statement, the income statement shows revenues and expenses for a specified period. To help show which parts of the business are profitable (or not), it should carefully match revenues and expenses.

Balance sheet. This provides a snapshot of a company’s assets and liabilities. Assets are items of value, such as cash, accounts receivable, equipment and intellectual property. Liabilities are debts, such as accounts payable, payroll and lines of credit. The balance sheet also states the company’s net worth, which is calculated by subtracting total liabilities from total assets.

Cash flow statement. This shows how much cash a company generates for a particular period, which is a good indicator of how easily it can pay its bills. The statement details the net increase or decrease in cash as a result of operations, investment activities (such as property or equipment sales or purchases) and financing activities (such as taking out or repaying a loan).

Retained earnings/equity statement. Not always included, this statement shows how much a company’s net worth grew during a specified period. If the business is a corporation, the statement details what percentage of profits for that period the company distributed as dividends to its shareholders and what percentage it retained internally.

Notes to financial statements. Many if not most financial statements contain a supplementary report to provide additional details about the other sections. Some of these notes may take the form of disclosures that are required under Generally Accepted Accounting Principles — the most widely used set of accounting rules and standards. Others might include supporting calculations or written clarifications.

Financial statements tell the ongoing narrative of your company’s finances and profitability. Without them, you really can’t tell anyone — including yourself — precisely how well you’re doing. We can help you generate these reports to the highest standards and then use them to your best advantage.

© 2019