Business growth

Business growth can be good—or it can be a disaster. If you’re considering growing your small business, consult with a CPA for strategic advice that will help you determine your next steps. Your business growth strategy is an important step in the progression of your small business. See how Capstone CPA Group can help

White House proposes sweeping changes to overtime rules

file4741281776353As many business owners already know overtime rules are traditionally pretty standard. There are two basic principles: One, if you pay more than a very low threshold in salary per year (23,660). And, your employee performs executive, administrative tasks, or is a special class of worker called a professional worker then this employee would not be subjected to the overtime rules.

Under the changes proposed and to be ruled on in 2016, the Department of Labor is suggesting some large and sweeping changes. First, the pay threshold to avoid paying overtime would be increased to $50,440 and be adjusted for inflation thereafter. Second, there would be more restrictive rules on which types of jobs would qualify as executive, administrative and professional workers. These changes are estimated to affect nearly 5 million workers in the US. Since this is a short-story format. I cannot include all the information that has been proposed. For this reason, if you need more information, click here.

Normally, we are not in the business of reporting or commenting on proposed changes, however the information contained in this proposal is very significant. If you have any questions about overtime rules, or the proposed changes, feel free to reach out to us.

Strategic advice

Do you want your small business to grow? A CPA is a trusted business advisor who can offer strategic advice that will help get you to that next level. At Capstone CPA Group we tailor all of our solutions to your needs. We believe small business growth is more important than most other offerings. Feel the difference.

Bill eliminates prepayment of taxes Michigan

The State of Michigan has changed a long standing collection issue. Recently the State of Michigan passed and signed into state law, Senate bill 100. Under prior law, when you had an outstanding debt with the State and did not contest your bill prior to it being assessed; The only way to argue the assessment was to first pay the bill, including penalties and interest. Once you paid, you could then argue / protest the underlying tax. This prepayment requirement was often a very harsh penalty in and of itself.

Thanks to Senate bill 100, much of that has changed. Now, if you are a resident of the State of Michigan, you no longer have to pay the debt in order to argue or protest the underlying tax assessed. This is a rather large procedural change, and opens the door to a more fair and equitable dispute system. Watch for more posts regarding tax collection issues for the State of Michigan. For more information about this bill click here. If you are a tax nerd, you may also want to check out the actual bill, by clicking here.

Financial statements

We can help you grow your small business by preparing financial statements to show potential lenders. If you are trying to secure a loan, you may need financial statements or a compilation. See how Capstone CPA Group can help.

Freelancers on the rise

Congratulations to young entrepreneurs! You are the catalysts of economic growth. People have started to think about work differently. Similarly, companies are also starting to see freelance and contract jobs as a benefit as well. Plus, job connection sites have made it easier to connect businesses with freelancers looking for work.

Click here for more information about the freelance movement

 

Merry Christmas

To all our friends and family we want to wish you a very Merry Christmas!

Construction Contracts

One of the most important things to understand in the construction industry is how to bill for services. Once you have a better understanding of the billing structure it is much easier to compare bids and construct the contract.

This post is not a complete list of all forms of construction contracts and there may be instances where contracts have portions of each type of contract.

Fixed price / Lump sum contract:

From the name you can understand fairly easily that the lump sum or fixed price contract is a construction contract that stipulates the price of the building project based upon the needs included in the design/per your written contract. However, it is important to note that usually these construction contracts are fixed as it relates to the agreed service level. In the construction industry changes happen constantly. For this reason, construction contractors should get signed change orders as changes occur so they are not left eating the cost of construction changes when the contract is complete.

Cost plus contract:

With the cost plus contract, the construction company says that they will charge the contract out at the cost of materials plus a percentage or fixed price for their own construction time. This model is based upon the thought that construction materials represent the largest portion of the overall construction contract.This model is nice in a scenario with many change orders, because it usually avoids the need for many signed change orders (as long as the change order can be supported in some manner). This is also nice for construction companies because purchasers are more concerned with the reputation of the company they hire, not the cost of the project. These types of contracts are also helpful as they can be bid before the scope of the project is known completely. Certain preparatory work such as site preparation, utility work and other prep stage projects are agreed based upon a cost plus model.

Maximum price contract:

Under a maximum price contract, or a price not to exceed contract, the construction company bids on the job, or part of the job and gives an overall estimate of the fees involved with a cap on the price charged for the project. Under this model, construction companies have an incentive to cap overall costs, while still making sure that the project is done appropriately. Many buyers are more willing to sign a cost plus contract with a price not to exceed, than a cost plus contract. The fact that these contracts are more valuable to consumers is the incentive for this type of contract. Many construction contractors include incentives to share the “cost savings” if the actual cost of the construction project comes in lower than the maximum price. This blending of risk and reward makes the maximum price contract a very attractive option in the construction field.

Unit price contract:

Unite price contracts are usually used in construction for repetitive tasks, which at the start of the contract the actual amount of the service is unknown. Examples of this type of contract include an agreement to deliver a certain amount of rocks, soil or other aggregate for a specified price per yard/ton. These types of contracts are used extensively in the road construction contracts as the tasks are usually repetitive and the costs can be estimated on this basis with relative ease.

Construction accounting can be very complex. If you are in the construction industry and do not use someone who specializes in the industry you are throwing money away. Let us focus on your business so you can run operations.

Giving Thanks

Thanksgiving is a time to reflect on everything we are thankful for. With that in mind, I wanted to take a minute to thank my family, friends and loved ones for all of their love and support in the last year.

I love Thanksgiving because it is a time to get together over a meal with everyone I love and catch up with them.

I hope you have a wonderful Thanksgiving with everyone you love.

Happy Thanksgiving from Anthony Momany, managing partner – Capstone CPA Group

Business tax audit risk

Five tips to help small businesses reduce the risk of a tax audit.

While you cannot assure someone that they will be able to avoid a business tax audit, you can help them reduce the risk. You will also notice that most of these items are generally good advice, so if you do find yourself facing a small business tax audit, you can feel a little better knowing you followed these principles. While you still made some mistakes (especially if you do not follow item #1) at least you will know that you were on the right track, which is important when you are dealing with a business tax audit.

  1. Hire a professional: Unlike most personal returns, business returns are more complex and usually have multiple forms to fill out just to file a single business tax return. For this reason it is important to hire a professional and not leave your business to chance. This is most important if you do not know what types of expenses you can include on your business return. This step alone assures that you have a professional to work with you, if you do face a business tax audit.
  2. Be honest: While it is tempting to “fudge the numbers” if you are facing a small business tax audit, it is much better to know that you have followed at least reasonable standards of filing and that you have a process in place to be able to review the numbers.
  3. Review the numbers: Depending upon the tools you use in your business, it may be very hard to review the numbers in your business. This is actually a big reason why we recommend that all businesses use some formal accounting system. Without a formal accounting system, not only might you be under reporting your income. You actually might be under reporting your expenses as well (we find both in business). In a business tax audit situation it is important to be able to rely upon your processes to find errors.
  4. Watch your deductibles: We have a theory that you should not pay one more dollar than necessary in taxes. That does not mean that you make numbers up. It also doesn’t mean that you leave numbers out. If you are in business you have more accounting and record keeping duties than an individual taxpayer, this is just part of your duties. But, there are ways to make sure you are reporting all of your business income and expenses. That is a large reason why CPAs are in business. If you are struggling with business accounting, hire someone that can help you out. This is what we do every day.
  5. File electronically: When you fill out your tax return by hand, you increase the chance for errors at multiple times. Business and personal returns can be very complex, but they become more complex when you attempt to fill out the forms by hand (most preparers would have a hard time filling out a tax return by hand as well). Computer software has streamlined the process of filling out and filing a return.

If you would like personal advice on some tax issues you have, and you are worried about a business tax audit (or you have received a tax audit notice), reach out to us. We are business and personal advisors that have an extensive background in business and personal taxation and can help you with your problem.

This is a blog article that uses content as included in a recent article by: CPA Practice Advisor. However, some of this material is new material. If you would like to check out the original article, click here.

Happy taxing!