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Will the SECURE Act Affect Your Retirement Planning?

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The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) was signed into law on December 20, 2019. The Act will likely impact large numbers of working Americans as well those already retired. In general, the Act is intended to increase access to tax-advantaged retirement plans and to help prevent older Americans from outliving their assets. Here are some of the changes that could affect your planning.

The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act) was signed into law on December 20, 2019. The Act will likely impact large numbers of working Americans as well those already retired. In general, the Act is intended to increase access to tax-advantaged retirement plans and to help prevent older Americans from outliving their assets.

Here are some of the changes that could affect your planning.

Delayed Deadline for Taking Required Minimum Distributions

Tax law has generally required individual retirement account (IRA) owners and retirement plan participants to begin taking required minimum distributions (RMDs) from their accounts once they reach age 70½. The new law pushes back the age at which these distributions must begin to age 72 for IRA owners and plan participants born on or after July 1, 1949. This change allows individuals to take advantage of their retirement account’s tax-deferred nature for a longer period.

No Age Limit for Making Traditional IRA Contributions

Beginning with the 2020 tax year, the new law eliminates the 70½ age limit for making annual contributions to traditional IRAs. This is a plus for those people who continue to work past age 70½ and want to keep saving for retirement on a tax-deferred basis.

Penalty-Free Birth and Adoption Distributions

The new law also expands the exceptions to the 10% penalty for early withdrawals from IRAs and other tax-deferred retirement plans by adding an exception for “qualified birth or adoption distributions” up to $5,000. The new law defines a “qualified” birth or adoption distribution as a withdrawal from an IRA or other eligible retirement plan made during the one-year period beginning on the date the IRA owner’s or the plan participant’s child is born or the adoptee’s adoption is finalized. If desired, parents may replenish their retirement savings by repaying the amount distributed.

Restrictions on Stretch IRAs

The new law places severe restrictions on the use of “stretch” IRAs. A stretch IRA generally permitted beneficiaries to take their RMDs from an inherited IRA over their life expectancy. Thus, beneficiaries were able to stretch payments from the inherited IRA over many years and potentially pass on the inherited IRA to their own beneficiaries. The SECURE Act changes the RMD rules for beneficiaries of IRA owners (and plan participants) who pass away in 2020 or later. Under the SECURE Act, the use of stretch IRAs is restricted to a limited group of IRA beneficiaries. The specific details on who is eligible to use stretch IRAs is complex, and IRA owners who base their estate plans on the use of a stretch IRA should consult with a financial professional to see how they might be impacted.

Small Business Retirement Plans

Good news if you own a small business — the SECURE Act provides incentives to make it easier for you to establish a retirement plan. Starting in 2020, eligible employers that establish a 401(k) or SIMPLE IRA plan with automatic enrollment may qualify for a new tax credit of $500 per year for up to three years. In addition, the existing credit for small employer plan startup costs has increased to as much as $5,000 per year for three years. Previously, the annual credit maximum was $500. Employers also have more time to establish a qualified retirement plan. Previously, a qualified plan, such as a profit sharing plan, had to be adopted by the last day of the employer’s tax year to be effective for that year. The SECURE Act allows a qualified plan to be adopted as late as the employer’s tax filing deadline (plus extensions).

Don’t get left behind. We offer a free initial consultation for business owners. Call us at 901-685-9411 to discuss your specific needs.

Filing Taxes Remotely Goes Viral in Wake of Coronavirus

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coronavirusCoronavirus continues to affect day to day life, and the new concern is it could potentially threaten conventional in-person tax-filing activities, such as heading to your local tax return center to review your tax documents and sort out your tax return.

If the spread of the virus worsens, this could result in more people staying home for weeks on end, and tax office visits may not be possible. This makes it particularly taxing for those tax filers with complicated returns, or who may have questions about their return.

Now may be a good time to consider filing remotely with a tax professional. Additionally, taxpayers are urged to file before the deadline to avoid any delays with their tax return. Some professional tax services provide remote services, allowing taxpayers to securely upload documents, electronically sign their tax return, and file the return securely and safely from the comfort of their home. Whether you are an individual, or a business, it’s a good idea to play it safe and file remotely with the assistance of a qualified tax professional.

Reviewing Last Year’s Business Records Gives You an Idea of What Worked and What Didn’t

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Rikard & Neal - Best Business PracticesBusy is good. Most small business owners would rather things were too hectic than too slow. As the year winds down, though, let your staff handle the busy-ness while you look at the business — where you are, what you’ve accomplished in the past year and where you’re headed in the new year and beyond.

Your Bottom Line

The quickest way to figure out where you are is to check your bottom line. Are you making money? Are profits better or worse than they were last year at this time? Are you meeting your expectations? If not, why not?

Your Business Plan

Change is inevitable. And businesses have a way of outgrowing their business plans. But if you don’t have a current plan, you don’t have a way of measuring your progress. So if you’ve been “off road” without a plan for a while, it’s time to formalize a plan that reflects past growth and sets new goals for the next several years.

Your Competition

The more you know about your competition, the better. Who are they? How are they different? How are they the same? Where do you overlap each other? Understanding their business model will help you prepare strategically for possible changes in the marketplace.

Your Secret Weapon

Your workforce is your secret weapon, especially if you’re in a competitive market. Dedicated, well-trained employees providing top-notch customer service can help put you out front of even the largest competitor. A rich, competitive benefits package will help you attract — and retain — a high-caliber workforce. Health insurance and retirement plans are highly valued benefits. You can offer a variety of other benefits to suit your employees’ needs and your budget. Ask your financial professional for information.

Your Future

Do you have a formal succession plan? Are you grooming someone to take over? A well-trained successor could help in the successful — and profitable — transfer of your business. And you can use life insurance to prefund all or part of the sale.

Don’t get left behind. We offer a free initial consultation for business owners. Call us at 901-685-9411 to discuss your specific needs.

Who Owes You? 5 QuickBooks Online Reports That Can Tell You Fast

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Rikard & Neal CPAs - QuickBooksKeep a constant watch on your accounts receivable to improve cash flow.

Quick: How many of your invoices are unpaid? Have any of your customers gone over 30 days past due? Did you bill all of the time and expenses for that project you just completed for a customer?

If you’re doing your accounting manually, there’s simply no way to get that information quickly. Depending on your bookkeeping system, you may not be able to get it at all.

QuickBooks Online has more than one solution for this problem. You see the first one every time you log in. The Dashboard contains a graphic in the upper left corner that tells you how many invoices are overdue and unpaid. Click on the colored bar labeled OVERDUE, and you’ll see a list of invoices with the unpaid ones right at the top.

You can tell at a glance how much of your money is tied up in unpaid invoices.

While this is important information for you to have as you start your workday, it doesn’t tell the whole story. To get that, you’ll need to access some of QuickBooks Online’s reports – five of them in particular. Click Reports in the left vertical pane, and then scroll down to the heading labeled Who owes you.

These reports are listed in two columns. Each has the outline of a star next to it. Click on the star, and the report will be added to the Favorites list at the top of the page. Click on the three vertical dots next to it, and you’ll be able to Customize the report. And as you hover over the title, you’ll see a small, circled question mark. Click on this to get a brief description of the report.

There are several reports in this list that can provide insight into where your outstanding revenue is. We recommend you run five of them at least once a week – more frequently if your business sells large quantities of products and/or services. The suggested are:

Accounts receivable aging detail

This report provides a list of invoices that are overdue, along with aging information. There are several columns in the report, but you’ll want to pay special attention to the last one: OPEN BALANCE.

Tip: If you have many customers or simply a high volume of unpaid invoices, you might consider running the Accounts receivable aging summary instead.

Changing the Content

Before you run the report, you should explore the customization tools provided for it. They won’t be the same for every report, but you can start to get an idea of what can be done. Hover over the report title and click Customize. A panel like the one pictured below will slide out of the right side of the screen.

QuickBooks Online provides deep customization tools for reports.

You can see some of your customization options in the image above. Beyond these, you can also work with filters and headers/footers. When you’re satisfied with your changes, click Run report.

If you want to run a report with its default settings, just click on the report title in the list to display it. You’ll have access to limited customization from there.

Four other reports you should be generating regularly are:

  • Customer Balance Summary: Shows you how much each customer owes your business
  • Open Invoices: Lists invoices for which there has been no payment
  • Unbilled Charges: Just what it sounds like: tells you who hasn’t been invoiced yet for billable charges
  • Unbilled Time: Lists all billable time not yet invoiced

We don’t expect you’ll have any trouble understanding reports like these; they’re fairly self-explanatory. QuickBooks Online offers many other reports, the standard financial reports that need to be generated monthly or quarterly, like Balance Sheet, Profit and Loss, and Statement of Cash Flows. You’ll absolutely need these should you apply for a loan or need to supply in-depth financials for any other reason. We can help you analyze them to get a comprehensive, detailed picture of your company’s fiscal health.

As Certified QuickBooks ProAdvisors, we can work with you to ensure that you are getting the most out of your QuickBooks accounting software. Send us an e-mail or call us today at 901-685-9411 to discuss your QuickBooks accounting needs with an experienced CPA. Or, request a free consultation online.

Take Advantage of the Small Business Administration

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Rikard & Neal CPAs - Small Business Accounting

What can the Small Business Administration do for your business? Probably more than you imagined! Click through for an introduction to the SBA and the many programs it offers to businesses like yours.

How can the Small Business Administration help you grow your business? Take a quick look at how the SBA works.

First, note that the SBA has a pretty wide definition of what is meant by “small.” You don’t have to be a mom-and-pop operation to take advantage of SBA loans. The cutoff limits vary by industry, but it’s possible to have hundreds of employees and still be eligible for SBA assistance.

However, there are four criteria all businesses must meet to obtain an SBA loan: They must be a for-profit business, they must do business in the U.S., the owners must have invested their own time or money in the business, and they must have exhausted all other financing options.

How does the SBA loan program work? The SBA doesn’t provide loans directly. If you need a loan, ask your lender whether it works with the SBA, or use the SBA to help connect with lenders. It means more paperwork and time to get an SBA loan guarantee, but getting the SBA involved can make the difference between getting the loan or not. You can connect with SBA lenders through the SBA Lender Match program. This speeds up the lending process.

There are multiple SBA loan programs. A basic loan program can help existing businesses and startups. These are flexible loans that can be used for lots of business purposes, including for working capital. There is also a special series of loans for property and equipment for businesses in specific areas targeted for development. The SBA also offers an array of special loans for veterans.

The SBA can provide disaster assistance to help small businesses that were hit by disasters — physical and economic assistance. For example, the SBA can provide loans to self-employed business owners who’ve lost their jobs due to disaster.

Help Beyond Loans

The SBA also offers, in partnership with other agencies, grants for research and development. The goal is to encourage businesses to do research that has the potential for commercialization. Some grants are for businesses run by socially and economically disadvantaged persons.

In addition, the SBA can help businesses get through the complex process of competing for government contracts; the SBA aims to level the playing field. After all, many government agencies require that some percentage of their purchases be set aside for small businesses, and you may be able to get in on these contracts.

Women and minority business owners can get specific assistance. The Office of Women’s Business Ownership provides help to women starting and running small businesses. Minority business owners, disabled and disadvantaged business owners, and immigrant and foreign national business owners can get special loans and help to start businesses.

The SBA also partners with SCORE, a network of volunteer expert business mentors with more than 10,000 volunteers in 300 chapters. You can find individual help for launching new companies or divisions and for business plan writing and marketing, for example.

Now that you see all that you can garner from the SBA, you may decide to visit your local SBA office to see what services and training are available in your area.

Our clients get personalized and responsive service from dedicated accounting professionals who will help you manage your business and keep your finances on track. We want you to feel confident that your accounting system accurately reflects your current situation so you can concentrate on running your business instead of trying to stay on top of your books. Send us an e-mail or call us today at 901-685-9411 . Or, request a free consultation to discuss your business needs with an experienced CPA.

2020 Q1 tax calendar: Key deadlines for businesses and other employers

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Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2020. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

January 31
• File 2019 Forms W-2, “Wage and Tax Statement,” with the Social Security Administration and provide copies to your employees.
• Provide copies of 2019 Forms 1099-MISC, “Miscellaneous Income,” to recipients of income from your business where required.
• File 2019 Forms 1099-MISC reporting nonemployee compensation payments in Box 7 with the IRS.
• File Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return,” for 2019. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it’s more than $500, you must deposit it. However, if you deposited the tax for the year in full and on time, you have until February 10 to file the return.
• File Form 941, “Employer’s Quarterly Federal Tax Return,” to report Medicare, Social Security and income taxes withheld in the fourth quarter of 2019. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter in full and on time, you have until February 10 to file the return. (Employers that have an estimated annual employment tax liability of $1,000 or less may be eligible to file Form 944, “Employer’s Annual Federal Tax Return.”)
• File Form 945, “Annual Return of Withheld Federal Income Tax,” for 2019 to report income tax withheld on all nonpayroll items, including backup withholding and withholding on accounts such as pensions, annuities and IRAs. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year in full and on time, you have until February 10 to file the return.

February 28
• File 2019 Forms 1099-MISC with the IRS if 1) they’re not required to be filed earlier and 2) you’re filing paper copies. (Otherwise, the filing deadline is March 31.)

March 16
• If a calendar-year partnership or S corporation, file or extend your 2019 tax return and pay any tax due. If the return isn’t extended, this is also the last day to make 2019 contributions to pension and profit-sharing plans.