Tax Reform - Standard Deduction Changes

The new tax reform law is the most significant tax legislation in decades. Now businesses and individuals are trying to digest the details and evaluate how the changes will impact their tax situation. Fortunately, Smith Schafer can help you figure things out.

One of the major impacts of the Tax Cuts and Jobs Act (TCJA) are the changes to the standard deduction amounts.

What is a standard deduction? The standard deduction is a deduction of a fixed dollar amount, adjusted each year for inflation, reducing a taxpayer’s taxable income.

2018 Year End Tax Planning & Updates

As the end of the year approaches, we want to remind you of various payroll and Form 1099 related changes, as well as other items to consider when processing your year-end forms.
 

Top 3 Accounting Mistakes We See in the Construction Industry

Success in the construction industry requires the ability to understand accounting and financial statements. It is critical for construction company owners and accounting departments to understand what mistakes may be lurking behind the numbers. The summary outlined below covers the three most common accounting mistakes we see in the construction industry.

 

Tips on Creating a Budget for your Construction Business

Are you arriving at year-end and wondering where all your money went? Owning a construction business requires both expertise in your craft AND financial skills. Creating a budget is the first step to keeping your financial progress on-track throughout the year. A budget:

  • supports planning and financial goals.
  • assists with managing your money.
  • helps keep costs under control.
  • aids with the decision-making process.

Below are a few tips to help you create a budget for your construction business:

How to Determine the Best Accounting Software for your Construction Company

invoice business flat lay

Changing your construction company accounting software may be stressful, time-consuming, and costly. However, making a switch to the right accounting software may help:

  • reduce manual work,
  • double tracking of jobs, and
  • help your construction company processes flow more smoothly.

Before committing to a new software package, a construction company should consider the following:

New Limit on Deductions for Business Interest Expense

The Tax Cuts and Jobs Act (TCJA) imposes a new limitation on deductions for business interest expense. This is a permanent change for tax years beginning in 2018 and beyond. Will your business be affected? Here is what you need to know.

 

To Elect Out … Or Not?

Qualifying real estate and farming businesses that elect out of the interest expense limitation must use the ADS to depreciate certain assets. Using the ADS results in lower annual depreciation deductions, because the ADS depreciation periods are longer than the depreciation periods under the regular MACRS rules that usually apply.

Understanding Local Sales Tax for your Minnesota Hospitality Business

Coffee shop front desk

As a general rule, local sales tax should be charged to customers on all sales made in a local taxing area. The local tax applies to anyone who is from outside the city or county and picks up items in the local area for business or personal use. This applies even if the customer takes the items outside of the local tax area.

 

Exemptions

Do not charge local sales tax on sales of taxable items when:

  • You receive a completed Form ST3 – Certificate of Exemption.

  • You ship or deliver the items to your customer outside the local area.

Construction Industry: What you Need to Know About Employee Benefit Plan Audits

paperwork between two people

Is your construction company required to undergo an employee benefit plan audit? This audit is required under federal law to ensure the plan’s functions, operations and processes are in compliance with established regulations. Unfortunately, these audits do not always go smoothly because the plan sponsor does not always understand the documentation, information and financial statement requirements for the audit. To help construction companies streamline the employee benefit plan audit process, Smith Schafer has provided a list of steps below to help companies prepare.

 

South Dakota v. Wayfair: Online Sales Tax Decision

person browsing the internet on computer

In the recent landmark South Dakota v. Wayfair, Inc. case, the U.S. Supreme Court struck down the physical presence nexus standard established in the 1992 decision Quill Corp. v. North Dakota. This means states can require certain retailers, with no physical presence, to collect and remit the applicable sales or use tax on sales delivered in locations within their state.

The decision removes a major barrier to online sales taxation, but the U.S. Supreme Court stopped short of formally declaring South Dakota’s law, which many states have mimicked, is valid in the absence of Quill. The U.S. Supreme Court made clear Quill is no longer a required part of any commerce clause test to determine when states may impose taxes. 

C Corporations - Tax Reform Affecting Tax Planning

One of the biggest changes under the Tax Cuts and Jobs Act (TCJA) is the permanent installation of a flat 21% federal income tax rate for C corporations for tax years beginning after 2017. The new 21% rate applies equally to personal service corporations (PSCs). (Under prior law, PSCs were taxed more heavily than other C corporations.)

This is great news if you own or manage a C corporation, including a PSC. Here are specific tax planning considerations for these entities under the TCJA:

Pages