Small Business Trends to Watch

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This link offers a comprehensive breakdown of the small business industry as it stands in 2022. For example, graphs displaying emerging trends, the effect of the pandemic, and hiring numbers are all included. Small businesses are often viewed as the lifeline of America, and these numbers back up that conclusion. No matter the current state of your business, being educated on trends included in this article can prove beneficial in the long run. Be sure to check out this link for the full list, more details, and educational graphs!

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Young Family Business Owners Can Be the Most Determined to Sustain and Grow Your Business

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According to research by Family Enterprise Foundation, younger generation owners are the most committed to preserving the family business. A survey found that “97 percent of next-generation respondents consider it important to sustain the family business, while only 74 percent of senior-generation respondents feel the same.” The importance placed on direct family leadership of the business is also higher for younger generations as 95 percent of younger respondents felt that family taking over is important, compared to only 65 percent of older generations. However, there are “significant differences in the level of importance assigned to these and other aspects of family business legacy, depending on the generation of respondents.”¬†

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The 50/30/20 Budgeting Rule Explained

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You may or may not have heard of the 50/30/20 budgeting rule, but it's a good one — one that will help make organizing your finances a lot simpler. The basic idea is to divide up your after-tax income and allocate it for spending in this way: 50 percent on your needs, 30 percent on your wants, and 20 percent on savings. Below are more details on how to do this.

Spend 50 percent on needs. These bills are those that are necessary for survival, such as rent/mortgage, groceries, utilities, health care, insurance, and payment of the minimum amount on your debts. Other things like Starbucks, Netflix, and dining out might feel like needs, but if you get honest, they really aren't (they fall into the next category). To get started, here's a free worksheet. If you’re spending more than 50 percent on your needs, then look for areas to cut expenses or downsize your lifestyle. For instance, you could eat in (and make delicious coffee at home), maybe take public transportation to work, or even choose a smaller home or more modest car. While these compromises might not be very fun, they’re necessary to make you fiscally healthier. Plus, they’ll pay off in the long run, which will feel really good.

Allocate 30 percent for wants. The best way to look at this category is to think of everything as optional. It includes obvious choices like going to your favorite restaurant, joining a gym, or buying that new techie gadget or a gorgeous new purse. Another way to frame wants is, for instance, choosing a more expensive entrée like lobster instead of a pasta dish, or buying a Mercedes instead of a no-nonsense Honda. That said, living a spartan life with no feel-good experiences isn't realistic. We all have desires. But if you find you're spending more than 30 percent on these things, a way to cut back is to plan ahead on splurging and do it less often. This way, treating yourself might feel better than it normally would.

Sock 20 percent away on savings. This category, of course, includes your savings account, as well as investment accounts like IRAs, mutual funds, and stocks, which may or may not be part of your retirement. Besides saving money to pay for future bills, it's also recommended to put away at least three months of expenses in an emergency fund to draw upon should you lose your job or experience another such unexpected life event. If you spend this allotment, start replenishing it as soon as you can. Other things that fall into savings are paying more on your debt than just the minimum payments because you'll be reducing the principal and future interest you'll owe; so in effect, you’re saving. While tucking funds away might seem impossible, once you get in the habit of it, you won’t miss it. And a few months down the road, when you take a look at the sum you’ve accumulated, you’ll most likely be super happy.

Admittedly, saving money and managing it is a challenge — know that you’re not alone. As of January 2022, the personal saving rate was 6.4%, down from 8.2% in December 2021. So take heart. If you’re saving anything at all, you should count that as a victory. You’ll be way ahead of the crowd. In the end, seeking a financial equilibrium and erring on the side of saving will contribute to a more abundant life in the long run.

Sources

https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp

What Every Taxpayer Needs to Know This Season

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The IRS is currently suffering a severe backlog in processing returns from 2021 for the 2020 tax year. As of Dec. 31, there were still more than 6 million unprocessed individual returns with notices and pending refunds. There are a few things every taxpayer should know that can help them navigate any delays in filing or speeding up the process to make filing this year as smooth as possible.

Pass on the Paper

Nothing speeds up the process like electronic filing. Despite the uptick in electronic filing over recent years, the agency is still buried in paper, receiving almost 17 million paper filings last year.

When filing electronically, there’s a good chance you’ll see your refund within 21 days of acceptance. Just make sure you keep track of your submission and that it is accepted and not bounced back.

Validate Your Return Properly

To file electronically and have your return accepted, you’ll need to validate your return with last year’s adjusted gross income. As simple as this sounds, it’s not as easy as looking at last year’s return if your 2020 filing is still pending. In this case, you’ll need to enter $0 for your 2020 AGI or the agency may reject the filing.

Reconcile Your Child Tax Credits and Stimulus Payments

Returns with innocuous errors are one of the biggest causes of notices and held-up returns. Simple mistakes or the careless compilation of a return can cause matching errors and throw a wrench in the processing of a return, with two issues being prone for the average taxpayer: the advance child tax credits and stimulus payments.

Taxpayers should pay extra attention to and double-check these areas of their returns to avoid delays. While taxpayers may receive a Letter 6419 for child tax credits or 6475 for stimulus checks, it's still a good idea to verify your payments for these two areas online for the best accuracy.

Another snafu that can arise is for married couples filing jointly. You may each receive separate letters showing only half of your total payments. Make sure you verify and report the total amount in these cases. Remember that avoiding math errors can save a lot of time and headaches later.

New Questions on Page #1 – “Virtual Currency”

More and more taxpayers are also owners of some type of cryptocurrency. If you are one of them, then this year, for the first time, you'll need to answer a new “stand-out” question on page one of your tax return.

There is now a simple yes or no question on the front of every Form 1040, asking if you received, sold or exchanged any cryptocurrency.

Your answer should be “Yes” if you staked, sold, exchanged, mined or used crypto to purchase goods or services in 2021. If you only purchased cryptocurrencies and held them, then you should make sure you check “No.”

A “Yes” here is a flag to the IRS and they'll be looking for you to report income from staking and mining or gains or losses on Schedule D. It can also fast track your return to the manual review pile, adding further delay to processing your return. But remember, that's no reason to not answer truthfully.

Taxing Saturdays

Reaching the IRS via phone is notoriously difficult (which is why having a CPA prepare your taxes can be more than worth it). Average wait times currently exceed 23 minutes. In response, the IRS is adding monthly walk-in hours on select Saturdays at certain Taxpayer Assistance Centers, starting on Feb. 12.

To access this service, you'll need government-issued photo identification, a Social Security card or your Individual Taxpayer Identification Number, and any IRS letters or notices. If you are filing on your own, this can help clear up issues; but remember, it's best to use a paid preparer. They can handle both administrative issues and offer their expertise.

Conclusion

The IRS has a huge backlog of returns with issues, often resulting from simple avoidable problems such as math errors or paper filing. Do yourself a favor and follow the advice in this article to make this year less “taxing” on everyone.

Considerations When Selling a Business

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According to the U.S. Small Business Administration and Project Equality, 60 percent of business owners plan to cash out of the business in the next 10 years. For the baby boomer generation, it's especially important as they contemplate retirement, with this generation reportedly owning 2.3 million businesses. When it comes to getting a business ready for sale, there are many components to review and get organized before looking for prospective buyers.

The first thing owners looking to sell their business are often asked is why they're selling. A sale may occur for many reasons – voluntary or not. Some people are looking to retire, while others might be looking to exit their business because things soured with partners. These are just some of the reasons why business owners or partners want to sell their business or stake in a company. Entrepreneur magazine says there are “three ways to leave a business – sell it, merge it or close it.”

According to Entrepreneur magazine, there are many considerations for business owners when they are contemplating selling. For profitable companies, it's more often due to choosing to sell, but not always. When there's the desire to sell a business, if the owners can show potential purchasers some or all of the following, chances are it will sell sooner than later and for a fair price: growing income, profitability, and a customer base, along with a business plan and product/services with long-term potential.

Another consideration is the timing of the sale. Ideally, getting the business' house in order will benefit both the seller and the buyer. With this in mind, it's important to have a few backup buyers in case the first deal falls through. One reason a deal may fall through is that the buyer didn't qualify for financing before the sales process got serious. This planning can give the business owner and potential buyers time to review, audit, and organize financial records; review and determine the business structure; and determine and analyze the business' customer base. This review and organization will help the new buyer maintain business continuity if they decide to purchase the business.

The next step is to get the proper documents in order. Organize the cash flow statement, balance sheet, and income statements, along with tax returns from the past few years. It's important to inventory all equipment, intellectual property, trade secrets, etc. to see what can be sold and transferred and to verify the current market value of each. Taking stock of both sales records and suppliers—and getting contact information for both—will help make a sale more likely. Depending on if the information is proprietary or not, it's important to have this ready to share, under confidentiality, with potential buyers. An operating manual and a general overview of the business are also necessary in order to show the company's presence clean and repaired.

Another consideration is how business assets that aren't so easy to touch will be valued. According to the American Bar Association, goodwill is an intangible asset, such as reputation, along with intellectual property like a trademark. The New York State Society of CPAs' (NYSSCPA) publication, The CPA Journal, reports that goodwill has an indefinite life, and one way to see if it meets the test of being goodwill is if it “is inseparable from the business.”

Another consideration when selling a business is to see its recent cash flow and to calculate it properly for potential buyers. According to the NYSSCPA and the Statement of Financial Accounting Standards (SAFS) 95, cash flow from operating activities (CFO), per the SFAS 95’s statement of cash flow (SCF), is calculated by starting with the net loss or income and then factoring in differences in working capital and non-cash sales.

Your business’s CFO shows how much it earns from its operating activities, as the name implies. It's important to see how this figure differs from investing or financing operations that may be ancillary to the company's irregular financials. Once this information is known, it gives potential buyers an accurate assessment of the company they are considering buying to see if they're comfortable with the existing business. Showing a business that's doing well can help attract buyers at a fair price.

While each business is different and the reasons for exiting it vary, understanding what potential buyers are looking for can increase the chances of a fast sale at a fair price for both seller and buyer.

Sources

https://www.score.org/blog/how-profitably-exit-your-online-business

http://archives.cpajournal.com/2002/0102/features/f013602.htm

https://www.entrepreneur.com/encyclopedia/selling-your-business

https://www.americanbar.org/content/dam/aba-cms-dotorg/products/inv/book/213938/5070556_SamCh.pdf

https://www.cpajournal.com/2019/11/27/the-challenge-of-accounting-for-goodwill/  

http://archives.cpajournal.com/old/14152806.htm

https://www.sba.gov/blog/7-tax-strategies-consider-when-selling-business

What Trends Should Small Businesses Be Watching in 2022?

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This article discusses a variety of trends that small businesses should either be focusing on or not as we continue along in 2022. For example, this link lists shipping status, waiting for the new normal, and the meta-verse as overrated trends that your small business should not be too worried about. On the other hand, trends such as constant communication, investing in technology infrastructure, the online marketplace, and product packaging should be a priority for your business this year. be sure to check out this link for more information and details!

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Does Your Estate Plan Need Updating to Include Digital Assets?

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This article explains the importance of keeping your estate plan up to date, especially since people are living longer and need more options in their documented life. Three sections in your estate plan that should be examined several times include digital assets, guardianship designations, and appropriate names in the documents. Adding an addendum in legal documents can help with the hassle of updating each new digital asset program. Choosing a guardian that will act in the best interest of the person in need is important and having multiple people acting as guardians can help ease the load of the affairs. Having appropriate names included in the estate plan strengthens your documents because life changes, and the people you have named could get ill or possibly refuse the responsibilities.

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Memphis Accounting Firm Claims Two Accounting Today Awards

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MEMPHIS, TN РReynolds, Bone & Griesbeck PLC (RBG) is pleased to announce that the firm was recently named to Accounting Today’s 2021 list of the Best Accounting Firms to Work For and Best Firms for Young Accountants.

This is the second consecutive year that RBG has been acknowledged as Best Accounting Firm to Work For and the first time it was named to the Best Firms for Young Accountants list.

“It is a great honor to be recognized as one of the best accounting firms to work for,” said Skeet Haag, CPA, managing partner of RBG. “It’s amazing to receive these two sought-after awards, especially at a time when staffing and retention has been hardest for our profession. We take great pride in fostering growth and creating career opportunities for our younger staff.”

Firms from across the United States entered the survey process to determine Accounting Today’s Best Accounting Firms to Work For. The survey program is designed to identify, recognize, and honor the nation’s 100 best employers in the accounting profession. Each nominated company was evaluated based on workplace policies, practices, philosophies, systems, and demographics. In the wake of the COVID-19 pandemic, firms were also assessed based on their response to employee safety matters. Seventy-five percent of the combined score was attributed to an employee survey that measured engagement and satisfaction. Best Companies Group managed the overall registration and survey process, analyzed the data, and determined the final ranking.

To qualify for the Best Firms for Young Accountants, firms needed to have at least 15 employees under the age of 30 or have employees under 30 constitute at least 10 percent of their total employee count. An anonymous employee survey was distributed, and the response rate for employees under the age of 30 was required to be at least 40 percent. Firms were then ranked according to the average positive response rate.

Since 1905, Reynolds, Bone & Griesbeck has delivered the highest quality accounting, audit, tax, and advisory services to its clients. Over the last century, much has changed, but RBG’s  principals have not. RBG continues to uphold the legacy of its founders, who were among the first certified public accountants in the state of Tennessee. Through dedicated service to clients and employees, RBG continues to commit to its core values of passion, respect, ownership, stewardship, teamwork, elevation, and community.

Strategies for Preventing Fraud

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This article discusses how fraud is one of the most concerning topics for start-ups and small businesses alike due to the highly digitalized world that we live in today. It is so prevalent that “organizations report losing 5 percent of their annual revenue to fraud.” For a small business, that could be detrimental. However, utilizing best practices surrounding areas such as payroll, online banking, and written checks can all help protect your business. Additionally, hiring a forensic accountant while your business is still young can prove beneficial in the long run. Be sure to check out this link for more information!

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Building a Business Case for Remote Work

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This article explains the challenges that businesses face when dealing with remote workers. Mobility managers may face numerous tasks, including understanding complex and evolving rules for tax, immigration, and other legal purposes. Mobility managers also will need to communicate risks and information requirements to business units and their mobile employees. Risks that occur when a business is not staffed to create a proper policy and framework for your mobile workforce, include compensation risks, corporate law risk, emergency risk, immigration risk, payroll risk, and social security risk. In 2021, GTN conducted a business travel survey of 169 organizations representing a wide range of industries, and out of the 169 organizations, 72% of them have a global travel policy, yet only 31% are utilizing a method to track their business travel population.

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