Tax Reform impact on small business

Six Things Small Businesses Need to Know about the New Tax Law

The first major legislative victory on behalf of President Trump and the largest tax reform package in over 30 years, the Tax Cuts and Jobs Act was finalized by Legislators on December 20, 2017 and was signed into law just days later.

Today, we’d like to explore six important details of the new tax plan, discussing how they will impact small and medium businesses in 2018 and beyond. This is by no means comprehensive, and we would be more than happy to discuss fine intricacies with you as needed, but let this be a starting point as you read the entire text and its proposed changes to the tax code.

Corporate Tax Reduction

If you’ve only heard one thing about the new tax bill, it was probably this: The corporate tax rate in the United States has been reduced from a progressive rate reaching 35% for most corporations to a much more competitive 21 percent. The United States has long had one of the highest corporate tax rates in the world: The Federal Government levied 35% of a corporation’s earnings—before state taxes.

In total, the average corporation paid 38.91% of its income to Federal and State Governments, comparable to 35% rates levied by Sudan, Democratic Republic of Congo, and Chad.

Additionally, the combined Federal and State Corporate tax rates were 59% higher than Denmark, 77% higher than Sweden, and 211% higher than the business-friendly Ireland.

The reduction in corporate tax rates will not only encourage more investment in people (who also will see more of their paychecks), it will reduce a company’s motive for offshoring, create more opportunity for research and development (which also gets a change), and positions the United States for growth.

What This Means for Small Businesses

For incorporated small businesses, who are often the target of feel good bills designed for campaign emails, this is a lifesaver, and something that will immediately start saving them money. Under the previous administration, a business could be penalized for hiring its 50th full time employee, offering to reimburse employee health insurance premiums, or growing too fast, but now, small business owners can reinvest their earnings into the business, offer better benefits, or position themselves for growth.

Pass-Through Deduction for Business Income

As a small business, if you’re not a C-Corp, it’s likely you’ve incorporated as an S-Corp, a partnership, or something of the like in order to reduce your personal liability in the event of a lawsuit. For many businesses, this is a much more affordable alternative to the double taxation that occurs under a C-Corp.

Under the new law, pass-through businesses (owners, partners and shareholders of S-corporations, LLCs and partnerships) receive a 20% deduction. It’s not that simple, of course, and will be tackled as you start to look at quarterly taxes or speak with your bookkeeper. For a look at all of the nuances, please view the Forbes article explaining Section 199A.

What This Means for Small Businesses

Small business owners and partners have put blood, sweat and tears into their business and will now be able to keep more of their own money. As the owner is often the person who gets paid last, who has often forgone a paycheck of his own to make payroll for the month, this is a welcome change, and could reward small business owners in multiple ways.

It also could add complexity for small businesses.

100% Expensing of Certain Assets (Section 168(k))

Another benefit for small businesses is the continuation and expansion of Section 179 expensing. Perhaps the most impactful change in all of the Tax Cuts and Jobs Act was to provide for 100% expensing of certain assets. Businesses love it. Economists love it. And any tax preparer who has had to navigate the interplay between the seemingly endless depreciation incentives in order to simply calculate the deduction for a given year really loves it.

Immediate Expensing (Section 179)

The law allows full expensing of short-lived capital investments — rather than requiring them to be depreciated over time – for five years, but phase the change out by 20 percentage points per year thereafter. The section 179 deduction cap doubles to $1 million, and phaseout begins after $2.5 million of equipment spending, up from $2 million.

Increase in Caps to Use Cash Accounting

A slight change for small businesses on the brink of being required to use accrual basis for tax purposes. The eligibility threshold for using cash accounting has increased from an average of $5 Million over the past three years to $25 million.

Changes to Net Operating Loss Carrybacks and Carryforwards

A net operating loss (NOL) is a loss taken in a period where a company’s allowable tax deductions are greater than its taxable income. The law scraps net operating loss carrybacks and caps carryforwards at 90% of taxable income, falling to 80% after 2022.

More Changes Ahead in 2018

While tax reform is now a reality, what could be next? From new infrastructure spending to necessary changes to tackle the budget deficit, tax reform is only one of the many legislative changes that could be on the horizon. As America forges ahead into 2018, we want to help you grow alongside the economy. At rinehimerbaker, we are experts in the field of outsourced accounting, accounting technology, and more, and want to help you. From tax advice to software implementations, we have the people and tools to help you. Get in contact with us to learn more.

Intacct Cloud Accounting

Product Spotlight: Intacct Cloud Accounting and ERP

At rinehimerbaker, our goal is to help you play harder. Whether that’s through our outsourced accounting services, allowing you to free up your time and money to focus on growth or through our advising services which allow you to make decisions more confidently in an ever-changing world, our goal is to help you succeed in any way we can.

However, did you know that in addition to the services we offer, we can also have product-focused consulting services? That’s right. As a proud reseller and partner of some of the most innovative software products of the day, we can also help you select and implement specialized cloud solutions like Tallie expense software, Bill.com payment solutions, MineralTree, and Gusto HR, among others—all of which we will be highlighting in coming months.

Knowing this, our bread and butter is accounting. This is why we have partnered with one of the most innovative accounting solutions of the day: Intacct.

What Is Intacct and How Can It Help You?

Intacct is a leading cloud accounting vendor who designs products for the end user—whether that’s someone from a finance team of one or one thousand. Founded in 1999, the company has spent nearly the past two decades focusing on one thing—making accounting easier to access and easier to manage. Built as a cloud application (internet + accounting = Intacct) before the cloud was “cool,” the company was a visionary and the product has grown and improved to become the trusted choice of over 11,000 organizations of all sizes, industries, and missions.

Intacct’s Mission is simple: Achieve Unsurpassed ERP Excellence.

The Intacct philosophy? It’s not complicated: We believe your ERP system should both accelerate business processes and support business people. Like you, we’re financial pros who understand the pressures and challenges on your side of the table. That’s why we measure our success by yours and strive to deliver the efficiency and insight to sustain fast growth.

The Basics: Core Financials, Module-Based Additions, Plug-and-Play Functionality

Intacct is built around its core financials—general ledger, accounts payable, purchasing, order management, accounts receivable, cash management, and reporting—which allow you to automate your most important processes, reduce your reliance on spreadsheets, and give you greater visibility into your real-time business performance.

Added on top of this the company offers many additional modules that fit into your organization’s processes, including but not limited to Contract and Subscription Billing, Contract Revenue Management, Fixed Assets, Inventory Management, Multi-Entity and Global Consolidations, Project Accounting, Sales and Use Tax, Time and Expense Management, and Vendor Payment Services.

Best of all, as a Best-of-Breed Solution, Intacct was designed to “play well with others,” meaning that your company can build its own suite of applications which are easily selected through the Intacct Marketplace and integrated through Intacct’s user-friendly APIs.

Top Benefits for Companies Using Intacct

With over 11,000 highly satisfied customers, there are a wide variety of reasons that companies love Intacct, some of which we share below:

  • Anytime, Anywhere Access in the Cloud
  • Quarterly, User-focused Updates (many providers only offer updates every six or twelve months)
  • Updates that don’t break integrations (many suite offerings rely on complex, costly customizations that fall apart with each update—requiring even more complex, costly customizations)
  • Growth-Friendly, Per-User Pricing that allows you to grow and add modules as you need.
  • “Crazy High ROI” with the data to back it up (average customers recognize a return on investment of over 250% and payback period of less than six months when switching to Intacct).
  • Guarantees which the company can back up—security, privacy, and uptime are all guaranteed as part of their service-level agreement, and they have the track record that exceeds their promises.

Learn More and Make the Switch

As a leading Intacct reseller, we are happy to speak with you in the multitude of benefits that companies are recognizing from Intacct, day in and day out. Over the coming months, we will be talking a lot about the benefits of Intacct, the success stories, and how to make the switch. Until then, we welcome you to register for one of their upcoming events, to download the Buyers Guide to Accounting Software, and to contact us to learn more.

why cloud and finance go together

Why Cloud and Finance Go Together

Peanut butter and Jelly. Wine and cheese. Summer and baseball. Cloud technology… and Finance? For many businesses, the move to the cloud has come as a sensible choice that has led to immense benefits including lower costs, improved accessibility, and access to technologies formerly reserved for organizations with larger budgets and accounting departments.

Why Cloud is a Fit for Finance

Finance in the cloud has been around for much longer than many may think. Many of the cloud financial management providers that exist today have been around for nearly two decades: two of the current leaders were founded in 1997 and 1999. These two organizations, initially limited by the technological barriers of their day, have evolved to become go to solutions for organizations of all sizes, industries, and missions.

In today’s business, employees work in diverse environments, use a wide variety of applications to meet their needs, and expect anytime access from anywhere they have internet—three things in which traditional, on-premises offerings fail to support.

Cost Effectiveness

When people think about the cloud, one of the first things that comes to mind is the affordability. While this is only one of many reasons cloud-based financial software has become a top option, it is still something that needs to be discussed.

With cloud finance, you generally pay per-user, per-module, meaning you’re paying only for what you use. Compared with licensed on-premises applications, this is much more affordable than maintaining a server room with IT staff, completing laborious and time consuming updates, and even paying the increased amount of electric bills that come from running servers on location.

Accessibility

Are you looking to work from home? Once upon a time, this was a pipedream for finance staff, who were confined to only working from the office or relying on a virtualization or mobility solution to connect to the servers at the office. Now, finance staff can access accounting software through a secure web-based platform or even a mobile app, meaning your people have access when and where they need.

Security, Uptime, Updates

For traditional software delivery methods, you relied on your IT department to install patches or waited on a service provider to update software. In a public cloud environment, updates are pushed automatically, and data is secured both physically (does your organization have armed guards?) and from data breaches thanks to highly granular user access controls, mandatory two-factor authentication, IP range limitation, and much more.

Cloud and Finance: Better Together

Now more than ever, the cloud is providing businesses new ways to grow, and providing finance and accounting professionals more time to focus on this growth. As an Intacct Value Added Reseller and Accountants Program Partner, rinehimerbaker has helped organizations to enjoy a business experience that features less stress, more time, better accounting, and greater results. Learn more about our services for businesses, nonprofits, and institutions, and get in contact with us to learn more.