Month: October 2023

Take Control of Your Veterinary Practice with a Budget

A budget can significantly reduce the stress associated with running a veterinary practice – especially during uncertain economic times – by helping you evaluate performance, set goals, measure progress, and make informed short- and long-term decisions and plans. With a budget, you can proactively manage your practice, making the most of it when business is good and successfully navigating more challenging times.

The best place to start is with the basics: Revenue minus expenses equals profits.

Revenue

Revenue is how much money is coming into your business. You should set revenue goals and growth based on a number of considerations:

Will your annual revenue goals on top line revenue help you achieve goals for profitability?
Are you setting annual price increases for non-shoppable services high enough to absorb expected increases in prescription drugs, payroll, etc.?
Are revenue goals achievable based on doctors’ current production levels?
What can you do – from coaching to adopting new lines of business or services – to help doctors achieve revenue goals?
Do you review doctor production with associate vets to ensure they reach weekly and monthly goals?

When it comes to revenue, plan on tracking it weekly, monthly, quarterly, and annually so you can see how it may be fluctuating in the short-term; compare it to past performance; and set goals for the future. (You can also use it to identify seasonal patterns so you’ll know when you can afford to increase spending and investments, and when to tighten your belt.)

Expenses

Expenses represent money that is going out of your business. There are fixed expenses which don’t change from month to month and variable expenses. The more detailed you can be about your expenses, the more empowered you are to make informed financial decisions.

Fixed expenses can include mortgage/rent; certain utilities (phone and Internet); base salaries; property taxes, insurance premiums; and debt repayments.
Variable expenses depend on use. Certain utilities like oil or electric can vary, as can overtime costs. Account for office supplies, external lab costs, pharmaceuticals, vaccines, inventory costs, over-the-counter medicine (vitamins, flea and tick treatments, shampoos, ointments), pet food, preventive care products, electronic monitoring chips, professional fees (for a lawyer or accountant), new equipment, and cleaning services and supplies.

With expenses on the rise in recent years, it is important to budget for your expenses and expected increases before finalizing revenue goals.

Profit

Profit is the money you have left over. A portion should be used to build an emergency fund (covering three to six months of expenses) so unexpected expenses don’t put you into debt. You may want to allocate a portion for reinvesting into your business. The remainder is how much you make for running your business.

What if there’s nothing leftover or a negative balance? That’s considered a loss. Budgeting will either help you accommodate the periodic loss by planning for leaner months or help you identify immediate actions you can take to turn things around.

Depending on your bandwidth and capabilities, you may decide to set and manage your own budget using spreadsheets or templates; employ software to promote accuracy, insights, speed, and ease; and/or engage an accountant to operate as a part-time Chief Financial Officer to handle the whole process, helping you to understand results and your options for next steps.

If you need help creating, monitoring, or adjusting your budget, remember, your RBT CPAs client manager is just a phone call away. For more information, give us a call today.

RBT CPAs is proud to say all our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

Are There Tax Moves You Should Make Before Year End?

In the blink of an eye we’re in the last quarter of 2023. Don’t blink again or you’ll miss the time remaining in the year to make decisions that can impact your tax liability. Instead, take a few minutes to consider deductions and tax credits you may be eligible for. Even better, call your RBT CPAs contact to talk through your options and plans. For now, here are highlights of some opportunities to consider…

Will you be eligible for a Qualified Business Income (QBI) deduction?

Eligible small businesses include includes sole proprietorships, partnership, S corporations, Limited liability companies. For 2023, total taxable income must be under $182,100 for single taxpayers and $364,200 for married taxpayers filing jointly. Businesses with taxable income exceeding those limits may qualify for a partial deduction if taxable income is under $232,100 for single taxpayers and $464,200 for married taxpayers and other tests are met.

For tax years beginning on or before December 31, 2025, the QBI (a.k.a. Section 199A) deduction allows eligible small business owners and self-employed individuals a tax deduction of 20% of their QBI plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income. That’s in addition to the standard deduction.

Do you need new equipment?

Internal Revenue Code Section 179 gives you incentive to consider it. If you buy or lease (with qualified financing) appreciable business equipment, you can deduct the full purchase price (or lease amount) from your gross income. Equipment can include office machinery, furniture, vehicles, computers, and more. The item must be new to your business, used for business purposes, and put in service the year that you take the deduction. The most you can deduct under Section 179 for 2023 is $1,160,000. There’s also an 80% first year bonus depreciation for 2023, so you can reduce your tax liability even more.

Have you increased research and development?

You can take a credit to reduce your income tax liability and, under the Inflation Reduction Act, apply up to a $500,000 credit towards payroll taxes for Social Security and FICA. At the same time, it’s important to know that all Section 174 expenses, including R&E for software development, must be amortized over a five-year period (15 years for research conducted outside the U.S.). Before this change, R&E expenses could be immediately deducted from taxable income. So, your tax liability will likely change and may increase significantly.

Have you invested in solar power or energy-saving facility upgrades?

Receive a tax credit for up to $5/square foot for energy efficiency improvements – including but not limited to interior lighting, business envelop, HVAC or hot water systems – that reduce energy and power costs. In addition, if you switch over to low-cost solar power, you may be eligible for a tax credit equal to 30% of the cost of switching.

Should you adopt a new retirement plan?

If eligible, you can claim a tax credit of up to $5,000 for three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. What’s more, as noted on the IRS website, “You can claim the credit for each of the first 3 years of the plan and may choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective.”

Deciding whether to take action to reduce tax liabilities and how isn’t simply black and white. It does depend on your short- and long-term business goals, and other variables. That’s why it’s best to speak with your RBT CPAs client manager. He/she can help you understand your options and the implications of any move you make, so you’re in the best position to maximize opportunities that may be available to you in 2023. For more information, give us a call today.

More School Districts Can Offer Free Meals Starting October 26

Thanks to an expansion of the Community Eligibility Provision (CEP) announced in a final rule September 26 by the U.S. Department of Agriculture (USA), an estimated 3,000 additional school districts with about 5 million students will be eligible to offer free breakfasts and lunches starting October 26.

With inflation significantly driving up grocery prices since the end of the COVID waiver providing free meals to students across the country regardless of family income, the Federal government, states, and school districts have grappled with the challenge – and expense – of addressing food insecurity among students, particularly in high poverty areas.

As a result, as of the 2022-2023 school year, the number of schools that adopted CEP grew to over 40,000 nationwide. To date, eight states have passed legislation establishing permanent universal school meal policies. Other states, like New York – which enacted legislation permanently requiring reduced-priced meals be provided for free – are making progress, with New York City, Albany, Rochester, and Yonkers offering universal free meals at school.

With the September 26 final rule, the identified student percentage (ISP) certified as eligible for free meals decreased from 40% to 25%, opening the door for another 3,000 high need school districts to make breakfast and lunch available to all students at no cost. Families do not have to apply for the program. Instead, data from SNAP and other income-based assistance programs will be used in a formula determining Federal funding; then, state, or local funds must cover any gap between Federal funds and program costs.

As noted on the USDA website, “As a result of this rule, more schools are eligible to participate in CEP and experience the associated benefits, such as increasing students’ access to healthy, no-cost school meals; eliminating unpaid meal charges; reducing stigma; and streamlining program administration and meal service operations.”

There’s more to come with the Summer Electronic Benefit Transfer Program for Children (Summer EBT) officially launching in 2024 to provide low-income families with school-aged children grocery buying benefits when schools close for the summer.

Interested in learning more about CEP and school meal programs? Visit Community Eligibility Provision; USDA School Meals; USDA Support for Schools.

In the meantime, The New York State Education Department (SED), is holding in-person and virtual training opportunities for Child Nutrition Program operators. Anyone involved with the operation of a school nutrition program may be interested. To see the schedule of training opportunities through November, click here.

While you’re focusing on school meal programs among numerous other priorities, please know you can count on RBT CPAs professionals to support your accounting, tax, and audit needs. To learn more, give us a call today.

Form 5500 Filing for ERISA Benefit Plans: What You Need to Know for 2024

Each year, all employee benefit plan sponsors – excluding church and government plans – must electronically file a Form 5500 using EFAST2 for each ERISA covered plan that meets certain thresholds. Failing to properly file can result in significant financial penalties ($2,233 per day/DOL and $250 a day up to $150,000 a plan year/IRS). For plan years beginning on or after January 1, 2023, there are updates to Form 5500 and Form 5500-SF and some related changes all plan sponsors should know.

Form 5500 and Form 5500-SF are used to report a plan’s financial status and operations. The DOL, IRS, and PBCG use information from the forms for enforcement, compliance, and research purposes. Other federal agencies and Congress use the data to assess employee benefits, taxes, and economic trends and policies. Information from the form is shared with plan participants and beneficiaries via a Summary Annual Report (SAR) that must be issued within nine months of a plan year end or two months after a Form 5500 extension.

In addition to defined benefit (DB) and defined contribution (DC) retirement plans, a Form 5500 needs to be filed for ERISA covered plans including but not limited to medical, dental, vision, disability, life, flexible spending accounts (FSAs), and health reimbursement accounts (HSAs). Failing to file can result in significant penalties from both the Internal Revenue Service (IRS) and Department of Labor (DOL).

On February 24 of this year, the IRS, DOL and Pension Benefit Guaranty Corporation (PBGC) jointly released revisions to Form 5500 and Form 5500-SF as they relate to DB and DC retirement plans. This is the third and final phase of changes that started in 2021 to update the Form to reflect the Setting Every Community Up for Retirement Enhancement (SECURE) Act.

A DOL Fact Sheet notes that key revisions include a consolidated Form 5500 reporting option for defined contribution group (DCG) arrangements; improved multi-employer plan (MEP), including pooled employer plan (PEP), reporting; an update to the participant count methodology to determine small plan eligibility for simplified reporting alternatives; a breakout of administrative expenses paid by the plan on its financial statements; financial and funding reporting improvements for PBGC-covered DB plans; the addition of Internal Revenue Code (IRC) compliance questions; and other changes as part of the annual review of forms and instructions.

Of particular interest to small businesses is the change to participant count methodology. This count is used to determine which DC plans are not considered large and can therefore use a simpler filing process via Form 5500SF and no annual audit. (Large plans must use Form 5500 and complete an Independent Qualified Public Account or IQPA audit annually.)

Previously, participant count was based on the number of employees eligible to participate (regardless of whether they did or not). Starting the 2023 plan year, a DC plan with 100 or more participants with account balances at the start of the plan year is considered a large plan and must complete Form 5500 and the IQPA audit. A plan with less than 100 participants with account balances at the start of the plan year can use Form 5500-SF and will not have to meet the audit requirement, saving time, effort, and money. (Consider talking to your benefit advisor about mandatory distribution of small accounts up to $7,000 under SECURE 2.0 as it may help lead to a reduction in your participant accounts.)

The Form 5500 deadline is seven months after a plan year ends. So, calendar year plans have a July 31 deadline unless they file an extension which pushes the deadline to October 15.

For more details, refer to Fact Sheet: Changes for the 2023 Form 5500 and Form 5500-SF Annual Return/Reports on the Employee Benefits Security Administration website; refer to the Final Rule; or visit the DOL fact sheet and DOL news release. Find SAR language for plan years 2023 and later, go to the Employee Benefits Security Administration webpage, under “General Reporting and Filing Compliance Assistance.”)

If you have any questions about Form 5500, please don’t hesitate to reach out to RBT CPA affiliate Spectrum Pension and Compensation. At the same time, you can count on RBT CPAs to take care of all of your tax, accounting, audit, and advisory needs. Give us a call to learn more.

Make Neighborhood Revitalization Plans Reality: Apply for a Choice Neighborhood Implementation Grant by December 11

On September 6, the U.S. Department of Housing and Urban Development (HUD) posted a Notice of Funding Opportunity (NOFO) for a Choice Neighborhoods Implementation Grant. About $256 million will be available for transformative awards of up to $50 million each. The deadline to apply is December 11, 2023.

Who Can Apply?

Given the program’s transformative reach, HUD encourages eligible communities of all sizes to pursue a Choice Neighborhoods grant. The Lead Applicant must be a Public Housing Agency (PHA), a local government, or a tribal entity. If there is a Co-Applicant, it must be a PHA, a local government, a tribal entity, or the owner of the target HUD-assisted housing. For a tribal entity, the local government of jurisdiction or tribe must be the Lead Applicant or Co-Applicant.

What Is Needed to Apply?

Applications must present a plan to revitalize a severely distressed public and/or HUD-assisted multifamily housing project located in a distressed neighborhood and transform it into a viable, mixed-income community.

When Are Applications Due?

December 11, 2023

Where Can I Learn More?

Visit the Choice Neighborhoods website at Hud.gov/cn and HUD Exchange for information and resources.

Why Apply?

Thanks to the Choice Neighborhoods grants, 13,000 new mixed-income units have been built across 52 cities, with plans for 37,000 more. Going beyond housing, the program has led to new businesses, parks, and grocery stores, as well as revitalized schools, childcare programs and healthcare resources with better outcomes. One study showed HUD’s investment generated $400 million in public and private resources; increased median household incomes and homeownership rates; and resulted in lower crime rates.

How Can the Grant Be Used?

Grants, along with public and private funds, support locally driven strategies to revitalize neighborhoods by transforming housing while investing in the surrounding area and resident services. The Choice Neighborhoods program focuses on:

Housing: Replace distressed public and assisted housing with high-quality mixed-income housing that is well-managed and responsive to the needs of the surrounding neighborhood;
People: Improve outcomes of households living in the target housing related to employment and income, health, and children’s education; and
Neighborhood: Create the conditions necessary for public and private reinvestment in distressed neighborhoods to offer the kinds of amenities and assets, including safety, good schools, and commercial activity, that are important to families’ choices about their community.

While you explore the potential of transforming high-poverty neighborhoods into places of opportunity and economic growth, you can count on RBT CPAs to take care of all of your tax, accounting, audit, and advisory needs. Give us a call to learn more.

NY Healthcare Workforce Bonus Applications Being Accepted October 1 – 31

Would you like to give your employees a bonus without paying a dime? Now may be your chance!

Certain healthcare employees who worked consecutively between April 1 and September 30 of this year may be eligible for a New York Health Care Worker Bonus of $500, $1,000 or $1,500. Between October 1 and 31, eligible employers can submit a claim for all eligible employees.

In 2022, New York Governor Hochul launched the Health Care and Mental Hygiene Worker Bonus program to support eligible employers’ efforts to recruit, retain, and reward staff, and ultimately increase the state’s healthcare workforce by 20% in five years. Following are some highlights.

Who’s an eligible employer?

As noted in the program’s FAQs as of July 27, 2023, you must have at least one employee; bill for services under the Medicaid state plan or a home or community-based services (HCBS) waiver; have a provider agreement to bill for Medicaid services arranged through a managed care organization or a managed long term care plan; or be an eligible education institution or other eligible program.

Eligible employers include “certain providers, facilities, pharmacies, and school-based health centers licensed under the state Public Health Law, Mental Hygiene Law, and Education Law, as well as certain programs funded by the Office of Mental Health (OMH), Office for the Aging, Office of Addiction Services and Supports (OASAS), and the Office for People with Developmental Disabilities (OPWDD).” This includes staff at hospitals and nursing homes; psychiatric centers; OASAS addiction treatment centers; residential programs operated or certified by OPWDD, OMH and OASAS; Medicaid assisted living programs; hospice residences; and more.

Who’s an eligible employee?

An employee must hold an eligible job providing patient facing care. There is a long list of positions eligible – see job titles here. In general, to be eligible an employee must earn less than $125,000 annually; work consecutively for the employer during a six-month vesting period between October 1, 2021 through March 31, 2024; and must not be excluded or suspended from Medicaid during the vesting period. The employee can be part-time, full-time, temporary or an independent contractor.

How much is the bonus worth?

Bonus amounts depend on the number of hours worked per week during the vesting period and can be in the amount of $500, $1,000, or $1,500. An employee can be eligible for up to two vesting periods and receive a maximum of $3,000 in bonuses. If the employee is a New York State resident, the bonus will not be subject to NY personal income taxes and any local income tax.

To take advantage of the program, an eligible employer must apply at www.nysworkerbonus.com between October 1 and October 31 for the latest vesting period. You’ll need an active MMIS ID with eMedNY or a Statewide Financial System (SFS) ID. There are a series of videos on YouTube providing more information about the program and how to apply. For complete program details, visit the NYS Department of Health website.

For information on tax implications, RBT CPAs professionals are available to help (we are also available to support your accounting, tax, and audit needs). To learn more, give us a call today.

IMPORTANT NOTE! This article is only intended to provide highlights of the Health Care Worker Bonus program. Complete program details are available at the NYS Department of Health website. If there is any discrepancy between the information in this article and the website, the website’s content governs.

What Tax-Related Questions Should You Be Asking Before Year-End?

In the blink of an eye, we’re in the last quarter of 2023. Don’t blink again or you’ll miss the three months remaining in 2023 to make decisions that can impact how much you’ll pay in taxes come April. Here are a few questions to consider and possible tax deductions and credits that may help you reach your goals.

What goals did you set at the start of 2023 and how close are you to reaching them? Are there tax moves that can help you cross the finish line?

Did you have a goal to increase the number of customers you serve?

Whether you want to build awareness of the value your business delivers or offer special deals and incentives at year-end, marketing is key, and related costs are deductible. Expenses can include digital or traditional marketing, website work, professional conference attendance, business cards, marketing professionals and services, and more.

Are you trying to upgrade operations for the future?

Under Internal Revenue Code Section 179, if you buy or lease (with qualified financing) appreciable business equipment, you can deduct the full purchase price (or lease amount) from your gross income. Equipment can include office machinery, furniture, vehicles, computers, and more. The item must be new to your business, used for business purposes, and put in service the year that you take the deduction. The most you can deduct under Section 179 for 2023 is $1,160,000. There’s also an 80% first-year bonus depreciation for 2023, so you can reduce your tax liability even more.

Are you looking to operate more effectively and efficiently? Do you have or do you need any project management software, cloud storage, accounting software, or other software subscriptions?

Depending on a number of variables, you may be able to amortize the cost over three years or expense the cost under Section 179 and 168k provisions. (On a side note: Whether you’re implementing for the first time or changing software providers, it can take several weeks to get things up and running. Now is the perfect time to get started if you are looking for a January 1 go-live date. Plus, transitioning January 1 makes your accounting a lot easier.)

Are you struggling to attract or keep talent?

Bonuses and pay are 100% deductible. As for healthcare, if you pay at least 50% of the cost of coverage (a.k.a. premiums) for employees, you can deduct the cost. If you are self-employed and buy health insurance for yourself and your family, 100% of the cost is deductible. Also, If eligible, you can claim a tax credit of up to $5,000 for three years for the costs to start and administer a SEP, Simple IRA, or other qualified plan. Finally, if you plan an employee celebration, it’s 100% deductible. Plus you can claim up to $25 per employee for a gift.

Are you looking to reduce your carbon footprint and increase sustainability?

Receive a tax credit for 30% of the cost of switching to solar power. For energy efficiency improvements (i.e., install interior lighting, a new building envelope, or an HVAC or hot water system that reduce energy and power costs by at least 50%), receive a tax credit up to $5/square foot. When it comes to commercial clean vehicles, the credit can be up to $40,000 under IRC 45W.

That’s just a sampling of the questions you should be asking now. There are a lot more: Should you take a class to learn something new to help your business? Should you start that research and development project? Is it time to evaluate insurance and bank costs? Should you consider a new business structure? How can you reduce your tax liability? Is it time to update your home office? The list goes on…

If you’re interested in discussing year-end tax planning with an RBT CPAs professional, send an email to Marketing@rbtcpas.com or give us a call.

NOTE! Tax laws and codes are very complex. While we’ve tried to ensure the accuracy of all the information presented herein, the actual tax laws and codes as presented on IRS.gov govern. What’s more, this article provides highlights about tax deductions and credits and should not be considered advice. Your best bet to ensure accuracy and completeness is to talk directly to a CPA.

New Incentive for New York Municipalities to Expand Affordable Housing

If your municipality wants priority consideration for a number of New York State discretionary funds, it has to obtain Pro-Housing Community Certification.

Although attempts to gain support of affordable housing initiatives in New York faltered earlier this year, Governor Hochul remains committed to boosting affordable housing by 800,000 units within a decade. On August 31, the Pro-Housing Communities Program opened for business, providing financial incentives for municipalities to get on board with affordable housing growth. Municipalities that either meet affordable housing growth metrics or commit to the program’s principles will be rewarded by earning priority consideration for more than $650 million in state discretionary funds.

The press release announcing the program notes, “Certified Pro-Housing Communities will be considered first among localities applying for the Downtown Revitalization Initiative (DRI); NY Forward program; Regional Council Capital Fund; capital projects from the Market New York program; New York Main Street program; Long Island Investment Fund (LIIF); Mid-Hudson Momentum Fund;  Public Transportation Modernization Enhancement Program (MEP); and any other funding where future appropriation language designates it as a Pro-Housing Community program.”

To apply for Pro-Housing Community Certification, an authorized official must email a letter of intent. Then, applicants must provide information on local zoning codes and housing permit approvals in the past five years in the templates provided. A municipality must show approval of permits increasing housing stock by 1% (downstate) or 0.33% (upstate) over the past year or permits increasing housing stock by 3% (downstate) or 1% (upstate) over the past 3 years. Within 90 days, the municipality will receive a decision about certification.

If your municipality hasn’t met housing growth requirements, it can still obtain certification by passing a defined Pro-Housing Resolution.

By March 31, of each year, localities must resubmit any zoning updates and housing permit data to remain certified. For the application and complete program details, click here.

This is just one of a number of executive actions the Governor is taking to address New York’s housing crisis. Additional actions include a program to advance residential projects halted by the expiration of 421-A in Gowanus; a requirement that state entities ID state-owned lands that may support housing; and a portal collecting and sharing community housing and zoning data.

In our neck of the woods, this summer, the City of Kingston bolstered its efforts related to affordable housing development by adopting a new form-based zoning code designed to make it easier for development to occur and establishing a Department of Housing Initiatives to support the City’s housing planning.

If you’re interested in learning more about how the lack of affordable housing impacts New York and its residents (or former residents), check out these articles from Pew Research and The Fiscal Policy Institute.

To free you up to focus on this, please know RBT CPAs is here to support all of your tax, audit, and advisory needs. Give us a call to learn how we can work together to promote your business success.