Tax Issues When Planning for Your Business in 2018

business planning at a desk meeting

The Tax Cuts and Jobs Act makes sweeping changes. But some of the new provisions won't necessarily be relevant to your situation. Here is a quick reference guide to the major changes under the new law to help you understand what is changing.

In general, these changes are effective for tax years beginning after December 31, 2017. For businesses, these changes are permanent, unless otherwise noted.

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Sales Tax Implications for the Construction Contractors

Construction Workers on site

Success in the construction industry requires the ability to cost effectively create a building envelope, structure or support system and virtually every financial decision regarding your construction company, has a tax consequence. The summary outlined below covers the most common sales tax implications for construction contractors.

Contractors must pay sales tax on the cost of all materials, supplies, and equipment to complete a construction contract. 

Tax Tip: You may pass this tax onto your customers as part of the materials cost. Do not itemize it separately on customer invoices.  

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Smith Schafer - Named a Top Workplace for Third Year in a Row

We are proud to announce we have been named a 2018 Top Workplace!

Top Workplaces recognizes the most progressive companies based on employee opinions measuring engagement, organizational health and satisfaction. Over 2,400 organizations were invited to participate in the survey, and over 71,000 employees shared their views.

Smith Schafer Managing Principal, Steve Erchul, is humbled and honored to be included in the list of Top Workplaces, especially since the judges were the employees! Here is a short video message from Steve!

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Tax Rules for Tip Jars

tips in a tip jar at restaurant

Are the cash amounts distributed to individuals from tip jars classified as tips under the Tax Code and subject to FICA tax? The tax rules for tip jars are complex. The April 2018 IRS memorandum states the cash amounts distributed to individuals from tip jars are properly classified as tips under the rules in a 2012 revenue procedure and are therefore wages subject to FICA taxes. This cash is also subject to the notice and demand procedures.

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Meet Our Transportation Team

Meet the Smith Schafer Transportation Team

This Meet the Team video is our chance to introduce you to the talented, experienced, and fun people who work at Smith Schafer! 

Transportation has been a key practice area of ours since 1971 and this team is committed to serving over 80 Minnesota transportation entities

Learn more at:

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Should Your Business Be a C Corporation or a Pass-Through Entity?

business work on computer

The Tax Cuts and Jobs Act (TCJA) introduced a flat 21% federal income tax rate for C corporations for tax years beginning in 2018 and beyond. Under prior law, profitable C corporations paid up to 35%. This change has caused many business owners to ask: “What is the optimal choice of entity for my start-up business?”


Choosing the Optimal Business Structure

Under prior tax law, conventional wisdom was most small and midsize businesses should be set up as sole proprietorships, or so-called "pass-through entities," including:

  • Single-member limited liability companies (LLCs) treated as sole proprietorships for tax purposes,

  • Partnerships,

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Succession Planning Insights for Transportation Company Owners

transportation profession working on business succession planning

As a transportation company owner, the decision about how and when to sell your business will be one of the hardest you will ever make. It will also be one of the most important. Maybe you have children or other family members who will continue the business. Maybe you have already been approached by an interested outside party.  Whatever your succession plan, there is potential for significant income, gift and estate taxes related to the sale of your business. This could mean business assets being sold to pay these taxes, leaving little for your beneficiaries. Business succession planning must include ways to continue your business and to do so with the smallest possible tax liability.

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New Study Reveals Costs, Means and Ways to Stop Fraud

Would you leave the front door unlocked to your business? Of course not. That would give thieves easy access to your assets. Yet a surprising number of organizations do not have strong antifraud controls in place to protect against dishonest people inside their organizations. And theft from insiders — also referred to as "occupational fraud" — can be costly.

Fraud losses vary significantly, depending on the nature of the scam and how soon it is detected. Globally, the median loss is $130,000, according to the findings from the 2018 Report to the Nations on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE). Here is a closer look at who was affected and how much was lost, as reported in the latest version of this biennial study.

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Spring Cleaning: Recordkeeping Guidelines to Save or Shred

Filing storage for record archive

Are you a recordkeeping pack rat? Many individuals and businesses hold onto paper and digital records indefinitely — just in case. But securely storing years of financial records can become burdensome. Here is some guidance to help minimize recordkeeping overload.

Secure Disposal of Sensitive Data

Think twice about keeping certain financial records indefinitely. The more records you store, the greater the likelihood your data will be stolen or hacked. Destroying sensitive documents can reduce the chances you or your company's employees and customers will become identity theft victims.

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Expanded Tax Breaks for Business Vehicles

driver behind the wheel of a vehicle

The Tax Cuts and Jobs Act (TCJA) expands the first-year depreciation deductions for vehicles used more than 50% for business purposes. Here is what small business owners need to know to take advantage.

Prior-Law Allowances for Passenger Vehicles

The new expanded deductions represent a major improvement over the prior-law deductions. Under prior law, used vehicles were ineligible for first-year bonus depreciation. In addition, the depreciation allowances for passenger vehicles were much skimpier in the past.

For 2017, the prior-law allowances for passenger vehicles were:

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