Month: December 2023

What’s Your Exit Strategy for Your Veterinary Practice?

Whether you are five years or 35 years away from retirement, understanding the long-term options for your business should guide the strategies and actions you take today.

No doubt, the most lucrative opportunities rest with selling to corporate consolidators. It’s estimated that about 25% of veterinary practices are now owned by a corporation, with momentum expected to continue in the years ahead. These corporations are learning how to maximize profitability of practices, with systems, processes, policies, purchasing, and more.

Consolidators have also learned where their biggest earning potential lay.

So, they target practices in large urban areas with more than two veterinarians on staff. Emergency services practices are among the most popular. Strong financials, brand, client base, reputation, and more all come into play, as do updated facilities, systems, lab equipment, and staff. (Let’s not forget state regulations. New York is one of several states prohibiting corporations from practicing veterinary medicine. To make a sale, a licensed veterinary owner needs to continue working and managing the medical side of the business.)

In recent years, it wasn’t uncommon to hear about corporate consolidators offering 10x to 15x (and sometimes even 20x) a practice’s value. It appears that these offers may have reached their peak and are coming in lower, but still higher than what you can get from a private buyer. However, this option is not available to everyone. If you find that your practice does not meet the criteria corporate consolidators are looking for, you still have options.

While corporate consolidators have definitely changed the landscape, there are still veterinarians who want to run their own business and be their own boss. With a severe talent shortage and pipeline, this pool of interested purchasers is smaller than in the past and they can’t offer the same multiples as large corporations.

Although the traditional process of selling a practice to an up-and-coming vet can be cost-prohibitive, especially when you consider student loan debt and the current economic environment, there are creative ways to structure customized sales to benefit both the buyer and the seller. (RBT CPA professionals can provide more details based on your specific practice and situation.)

One other option to consider: a merger.

While another veterinary practice in the area may have been your competitor for years, a potential merger can lead to more options for your exit strategy. With economies of scale, you can improve your financials, productivity, and purchasing power. A larger practice may be more attractive to recruits. You have more options for selling out to the partnership or an up-and-comer. This could also be the step that puts you on a corporate consolidator’s radar.

Regardless of where you are in your journey, it’s never too early to start exploring and planning for your exit strategy. If you need advice or assistance with your existing strategy, any aspect of operating a business, or accounting, tax, and audit needs, please remember RBT CPAs is here to help. Give us a call to learn what we can do for you and your business.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Is It Time for Your Business to Adopt an Enterprise Resource Planning (ERP) System?

Do you feel like you’re losing time trying to track down data and spreadsheets to make important decisions? Are you overwhelmed by the number of programs or systems you have that don’t “talk” to each other? Have you lost business, profits, or productivity due to data issues? Do compliance and regulatory issues keep you awake at night? Maybe it’s time for you to consider adopting an Enterprise Resource Planning or ERP System.

Who can adopt an ERP?

While a commonly held belief is that ERPs are only for large public companies that’s simply not true. The cloud and technology advancements have made it more affordable and accessible to businesses of all sizes. Today, ERP systems are available for small, medium, and large businesses.

What is it?

ERP stands for Enterprise Resource Planning. It’s a business software solution that can help you manage your data, resources, and operations. Rather than having different systems for distinct functions, an ERP integrates and automates a variety of processes and functions, which can include accounting, customer relationship management, e-commerce, finance, Human Resources, inventory management, manufacturing, marketing, procurement, productivity tracking, sales, supply chain, time systems, scheduling, and more.

An ERP can be modular and scalable, making it easy to add new features and capabilities as your business grows and/or needs change. Some are even customized by industry. While available on-premises (which requires heavy IT infrastructure and staffing investments), the cloud has made it possible to offer ERP capabilities on a subscription basis, prompting businesses big and small to adopt one as part of a larger digital strategy.

When should you consider moving to an ERP?

If you’re losing time, customers, productivity, profits and/or opportunities because of your current systems (or lack thereof)…if you can’t use data to make informed decisions in a timely manner…if you don’t have a big picture view of all aspects of your operation at any given moment…if you’re operating inefficiently…or if your business is having a growth spurt with no end in sight, it may be time to consider adopting an ERP.

Where can it deliver improvements and value?

It can help your business be more competitive by identifying and changing processes to operate more efficiently and effectively; use data to schedule production and projects more effectively; more accurately estimate and track product costs; make better, faster decisions; improve customer service; automate mundane tasks so staff can focus on value-added activities; operate more efficiently and reduce lead times while maximizing production and profitability; and use data for predictive modeling (what would happen if…) and real-time decision-making.

It can also improve your internal controls for accounting and financial reporting and compliance; set the stage for growth, whether that’s with a new business model or a new line of business; and support remote and distributed workers.

It may be considered by lenders, investors, potential business partners or a business sale as governance and business practices come under scrutiny.

Why move to an ERP?

It can offer numerous benefits. An ERP can help you improve data security, reduce operational and administration costs, make data-driven decisions, and serve as a framework that can support future growth. It also requires you to define controls that can help protect your business from fraud and other criminal activities, while boosting regulatory compliance.

How do I get started?

Start by doing some research of your own to learn about ERP systems tailored for manufacturing businesses like yours, what they offer, and pricing (many offer monthly subscription options). You may want to reach out to colleagues in trade associations to learn about their experiences with an ERP. It’s also a good idea to define your budget up front and even conduct a cost-benefit analysis to make sure it’s the right time and move for your business. Plan accordingly – it can take an average of three to nine months to implement a new system, train staff, and monitor outcomes. Finally, don’t underestimate the amount of work involved. An ERP implementation requires dedicated resources and hard work. When done right, the pay off can be quick and bountiful.

You may also consider reaching out to your RBT CPAs contact to learn how we’ve helped other clients choose and implement ERP systems. Also remember, to free you up to focus on projects like ERP implementations, RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

AI and Healthcare: The Evolving Regulatory Environment

No doubt, artificial intelligence (AI) has been one of the most talked about topics of the year, especially with the release of Chat-GPT-4 in March.

Suddenly, it seemed everyone became aware of the very real possibility of AI replacing humans in a variety of professions, prompting a plethora of discussions about everything from ethics and global regulations to societal impacts and future industry disruption.

While the initial hype has evolved into an ongoing drumbeat of multi-faceted discussions, AI is moving forward and when it comes to healthcare, there are opportunities to transform virtually every aspect of the industry. Now, governments worldwide are stepping up to address how AI will be monitored and regulated.

On December 8, European Union officials announced a provisional deal finalizing what will become the world’s first comprehensive laws regulating artificial intelligence. Called the AI Act, it seeks to regulate uses for AI rather than the technology itself. It also strives to protect democracy and uphold the law and fundamental rights, while encouraging innovation and investment.

The Act’s rules work along a risk spectrum, with lighter rules for low-risk applications like content recommendations and stricter rules for high-risk applications, like medical devices. Violations could result in fines up to the equivalent of $38 million or 7% of a company’s global revenue.

The Act won’t take effect until two years after final approval, which is expected early next year. Still, many believe it will serve as a global framework for classifying risks, ensuring transparency, and penalizing non-compliance.

What about the U.S.? On October 30, President Biden issued an Executive Order (EO) on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. Its purpose, as noted in Section 1, is as follows:

“Artificial intelligence (AI) holds extraordinary potential for both promise and peril. Responsible AI use has the potential to help solve urgent challenges while making our world more prosperous, productive, innovative, and secure. At the same time, irresponsible use could exacerbate societal harms such as fraud, discrimination, bias, and disinformation; displace and disempower workers; stifle competition; and pose risks to national security. Harnessing AI for good and realizing its myriad benefits requires mitigating its substantial risks. This endeavor demands a society-wide effort that includes government, the private sector, academia, and civil society.”

Interestingly, within the EO, an entire section (Section 8) is devoted to safe, responsible deployment and use of AI in healthcare, public health, and human services. Among other things, it includes key deadlines and deliverables (mostly driven by the Secretary of Health and Human Services):

Within 90 days of the EO, create an HHS AI Task Force. Within 365 of creating the task force, develop a strategic plan including policies and frameworks, and possible regulations, on AI and AI-enabled technologies in the HHS sector, including research, discovery, drug and device safety, healthcare delivery, finance, and public health.
Within 180 days of the EO, develop an AI assurance policy to evaluate important aspects of AI-enabled healthcare tools’ performance, as well as infrastructure needed for pre-market and post-market oversight of algorithmic system performance against real-world data.
Within 180 days of the EO, consider actions to advance understanding of and compliance with Federal nondiscrimination laws related to AI by HHS providers receiving Federal financial assistance.
Within 365 days of the EO, establish an AI safety program with a common way to identify and capture clinical errors resulting from AI in healthcare settings. Create a central repository for incidents that cause harm – including through bias or discrimination. Analyze data and outcomes to create recommendations and best practices for avoiding harm, and processes for disseminating them to stakeholders.
Within 365 days of the EO, develop a strategy to regulate the use of AI or AI-enabled tools in drug development processes.
Ongoing: create incentives under grantmaking authority to promote responsible AI development and use.

So, it looks like 2024 is going to be a landmark year for AI frameworks, potential regulations, and more. Stay tuned. As you consider what AI and related applications may mean to your organization, please remember RBT CPAs is here to provide accounting, audit, tax, and business advisory services. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

REMINDER! GASB Statement 101 on Compensated Absences Effective After December 15, 2023

It has been almost a year and a half since GASB 101 on compensated absences was issued to standardize how compensated absences are recognized, measured and disclosed. It takes effect for fiscal years beginning after December 15, 2023, although earlier application was encouraged. As a result of the Statement, governments will provide more consistent and comparable information about compensated absences. Here are the highlights….

Who does this impact?

All units of state and local government.

What is required?

A compensated absence liability is recognized for an unused leave attributable to services rendered if it accumulates; carries forward to a future reporting period; and is more likely than not to be used for time-off or paid for via cash or other means based on relevant factors like policies and historical information.

A liability is also recognized for a used leave that has not been paid for in cash or other means; in this case, the liability equals the amount of the cash or noncash settlement.

Measurement is based on an employee’s pay rate in effect on the financial reporting date, unless a compensated absence arrangement calls for a different rate at the time of payment (i.e., sick pay based on 50% of the employee’s pay rate). Salary-related payments – including the employer’s share of payroll related taxes, defined pension contributions and other post-employment benefit plans – are to be included as part of the compensated absence liability calculation.

Certain compensated absences like parental, military, and jury duty leave should be recognized as a liability when the leave starts. For other types, like paid time off, liability is recognized when the leave is used.

Also, certain financial disclosure requirements are changing. The funds that governments use to liquidate the liability for compensated absences do not have to be disclosed. Governments will now be allowed to disclose only the net change in the liability instead of the gross increases and decreases (as long as they identify it as a net change). Plus, financial statements must note consideration of Statement 101 and the adoption date.

When does it take effect?

Fiscal years beginning after December 15, 2023. So, if your municipality’s fiscal year ends this December 31, Statement 101 begins to apply starting January 1, 2024.

Why was the statement issued?

Per GASB.org, Statement 101 was issued “to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.”

How to promote compliance.

Each government entity should consider which benefits are affected; how its accounting system will gather necessary information and perform calculations; whether internal control processes need to change; how accounting entries for compensated absences will be documented; and the impact on its financial statement.

If you need advice or assistance with your GASB 101 implementation or any other accounting, tax, and audit needs, please remember RBT CPAs is here to help. Give us a call to learn what we can do for you.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Improve Your Bidding Process Before You Make a Bid

Creating winning project bids is a science onto itself. Do it right and you end up profitable and productive. The secret is to invest the time and attention to show the buyer why your business is the best for the job. In truth, that’s easier said than done, but there is some work you can complete before ever submitting one bid to promote your chance at success.

Define your business goals.

A commonly cited statistic asserts that your bidding process can be considered successful if you receive at least one job for every five bids submitted. As an accountant and a business advisor that feels random. To add structure, consider the big picture. What are your overall sales, profit, and cash flow goals for the year, quarter, and month? Can your answers guide your bidding activities, pointing to when you need to make more bids or set goals for improving your hit (win) rate?

Develop your brand.

A brand reflects your business’ identity or reputation. It’s what distinguishes your business from your competitors’, and it sums up the experience a client can expect when he/she awards you a job. Are you known for professionalism, quality, financial stability, safety, customer satisfaction, project management, environmental awareness, or something else? If so, you should be saying that, consistently, every time you submit a bid. If you need help, consider engaging a marketing firm or freelancer to summarize your brand and provide standard language you can use for bids (as well as marketing channels like your website, social media, and more).

Know your strengths and weaknesses.

Not every bidding opportunity is going to be a good fit. Consider creating a checklist – based on past work – to identify the types of projects that are worth your time and align with your business goals and outcomes. Similarly, a checklist of attributes to avoid can help you quickly decide whether it’s better for your business to forgo a bid.

Evaluate software, online tools, and services that can boost accuracy and productivity.

At the very least, an online search can help you find a variety of free construction bid proposal templates. If you’re looking for more, software and services are available to support the entire bidding process, cost estimations, work breakdowns, project management, proposal generation, takeoff accuracy, and more.

Prequalify subcontractors.

Since you should submit bids by the deadline, if not sooner, prequalifying subcontractors you may use on jobs can save you time and promote peace of mind that the people you’re engaging align with your brand, as well as your quality and performance standards. You may also review licenses and certificates of insurance to make sure the subcontractors have what you need when the time for a bid/job comes.

Expand your pipeline for learning about bids.

In addition to getting leads on projects from trade organizations, referrals, and suppliers, consider subscribing to a lead generation service. Evaluate which markets are served, client size, geography covered, success statistics, service options, and prices. Also look for features that would be of value to you – like getting an email when a new bid is opened.

By putting the time and effort in before ever making a bid, you are in a better position to choose and submit bids – and win projects – when the opportunity arises.

To free you up to focus on bids and all other aspects of running your business, please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Two Recruiting and Retention Advantages Small Businesses Have Over Big Businesses

Small businesses have two major advantages over large corporations when it comes to pay and benefits. That’s right – advantages!

First, you likely operate out of one location, which makes it easier to be well-versed on local economic conditions so you have deeper insight into what may be impacting your employees and how. Second, with fewer employees, it’s easier for you to find out what can make the biggest impact on retention and loyalty.

Let’s start with geography… It’s no secret New York is in one of the most expensive regions of the country and it’s a tough place to save money. According to the Federal Reserve Bank of New York, household debt is on the rise, especially when it comes to mortgages, credit cards, student loans and auto loans. Except for student loans, delinquency rates are increasing. As a result, anything you can do to help employees build savings and lower debt will undoubtedly be appreciated.

Next, consider how your employees’ demographics may impact pay and benefit needs. For example, a high school graduate may be mostly concerned about saving to move into his/her own place. A college graduate may be mostly concerned about student loans. New parents may be wondering where they’re going to come up with the estimated $25,000 needed for their newborn’s first two years. Middle aged adults may be more concerned about a mortgage or paying for college. Those approaching retirement may be preoccupied with wellness and whether they have enough retirement savings.

Based on what you know about your employees’ needs (or what you find out via a survey or focus groups), you’ll be in a better position to invest in rewards that help strengthen recruitment and retention. In addition, your business may be eligible for tax deductions and credits for offering certain perks. Consider:

Health care coverage If eligible, there’s a Small Business Healthcare Tax Credit worth up to 50% of the cost of employee premiums.
Retirement savings plans With SECURE 2.0, costs for starting certain plans may be covered 100%. What’s more, eligible employers can receive an annual credit up to $1,000/employee for contributions. Plus, small businesses can receive a $500 tax credit for automatically enrolling employees in its 401(k).
Paid time off For Paid Family Leave coverage, consider sharing the cost or paying the full cost of coverage, so employees keep more of their pay and have peace of mind that they’ll have an income and job protection should they have to take a family leave.
Early wage access or on-demand pay Allow employees to access earnings before payday, so they can avoid penalties for late payments due to cash flow issues, reduce the need to use high interest credit cards, and more.
Emergency savings accounts Help employees prepare for an emergency with an account set up at a local bank or credit union. Starting in 2024, under SECURE 2.0, add an emergency savings account to your 401(k) plan or allow for hardship withdrawals via self-certification.
Groceries How much would a membership at a local discount store mean to your employees? How about a meal allowance or food stipend?
529 College Savings Plan Help employees save for school for themselves or dependents. You can contribute and earn a tax credit. Savings can be used to pay for school or educational loans.
Tuition reimbursement or education assistance program In addition to helping pay for school, a program can also be used to help pay back student loans.
Child and elder care Depending on the type of benefit offered (i.e., onsite childcare versus paying for an offsite provider), your business may be eligible for tax credits or deductions.
Discounts programs or memberships Help employees leverage group buying power to save on everything from pet, car and home insurance to everyday purchases, appliances, and more.

Please note: The preceding are very brief summaries; a lot of conditions and requirements typically apply. To fully understand potential tax benefits of adopting certain benefits, it’s always best to consult a tax advisor. Also, before offering a benefit, it’s a good idea to run it by your employees to make sure it’s something they’ll value and use.

One benefit that may add value to all employees is financial education or advisory services. Whether you purchase classes online, hire a professional from a neighborhood bank to host classes, or take advantage of free online tools, helping your employees evaluate their financial situation, develop a savings plan, and reach goals is a valuable benefit given today’s economic environment. You help relieve the financial stress your employees may be under and build loyalty. (Avoid giving direct financial advice yourself, as it can backfire and lead to legal issues.)

Finally, if you’re struggling to retain employees there’s a good chance neighboring businesses are as well. Team up to see if you can offer discounts to each others’ employees – it can be a win-win for employees and businesses. (Your local Chamber of Commerce may be able to help.)

What if We Already Know How to Solve the Labor Crisis?

The current labor situation is different from any in our country’s history in one major way: there are simply more jobs than people to fill them.

A recent article on Bloomberg. com summed up the result, stating, “The time has arrived when America’s demographics are conspiring against its economic ambitions.” (Donnan, 2023) This sentiment holds true, according to a 2022 Manufacturing Institute/Deloitte study reporting almost half of manufacturing executives had turned down business opportunities due to the lack of workers (Institute, 2022). The situation is not going to get better any time soon, with the Congressional Budget Office predicting the American workforce will grow by less than .2% a year through 2031 (Office, 2023).

Many employers have set their sights on finding new, leading-edge solutions to address the crisis. No doubt innovation has its place, but so does creating a mutually beneficial, healthy employer-employee relationship and workplace based on fundamentals.

In January, Gallup reported that employee engagement is at its lowest since 2015, with the biggest declines in clarity of expectations; connection to the mission or purpose of the company; opportunities to learn and grow; opportunities to do what employees do best; and feeling cared about at work. The path to drive improvements isn’t new (ask employees for feedback; make changes based on feedback; clarify expectations; share and celebrate positive results); but, Gallup does have decades of proof that it works (Harter, 2023).

Another survey’s results issued in January, this time by the Conference Board, reinforce the crucial role fundamentals play in creating a workplace that works for today’s employee. The 2023 C-Suite Outlook Survey identified four strategies to create a better workplace: prioritize employee wellness to promote physical, mental, and financial health, as well as stress management; embrace flexible work arrangements; invest in all employees’ professional development; and strengthen succession plans. (Board, 2023)

There’s more. Executive Networks’ “The 2023 Future of Working and Learning Report” points to upskilling as the most critical aspect of organizational success this year. 45% of knowledge workers and 30% of front-line workers said people are leaving their company due to insufficient career advancement or development opportunities. About 83% of HR leaders and 79% of business leaders agree skills-based training should be used as a retention tool. (Networks, 2023)

Together, these survey findings and reports tell a powerful story: businesses need to get back to basics and walk the talk when it comes to creating the type of work environment that attracts, retains, and grows skilled talent. Still, this appears easier said than done.

The Manufacturing Institute with support from Colonial Life issued a report in November called: “The Manufacturing Experience: Closing the Gender Gap.” It says: “As it stands, women make up more than 29% of the manufacturing workforce. By raising the percentage of women in the manufacturing sector to 35% of total employment in the sector, there could be 800,000 more female manufacturing employees. This would be enough to fill almost every open job in the manufacturing sector today.” (Life, 2022) It sounds easy enough until you look at decades-old issues like pay equity.

The Pew Research Center issued a report in March stating, “The gender pay gap in the U.S. persists, and in fact, has 26 HV MFG barely budged during the past two decades.” In 2002 women earned 80 cents on the dollar as compared to men. Twenty years later, the pay equity gap improved by just 2 cents, with women earning 82 cents for every dollar earned by men in 2022. (Kochhar, 2023)

Another disconnect relates to diversity, equity, inclusion, and belonging (DEIB) initiatives. A survey commissioned by Indeed. com earlier this year found 49% of Black workers are considering or actively looking for another job due to unfair compensation, lack of career advancement, and lack of managerial support. Survey respondents indicate the actions companies take for DEIB (i.e., diverse hiring practices, diversity committees and awareness events) simply do not align with what Black employees want (i.e., pay transparency and equity; scheduling flexibility for work/life balance; and increased representation). (Team, 2023)

A presentation at the International Manufacturing Technology Show reinforced the disconnect. Cofounder of Thurgood Industries Darnell Epps said, “Black unemployment in our big cities is extraordinarily high, yet there’s very little outreach and recruitment in communities of color throughout our big cities. In Philly, LA, NYC…black unemployment in February was above 15%. In Detroit it was about 20%. More could be done with regard to the industry and with trade schools in focusing on those populations that have been underserved and have historic levels of unemployment and underemployment.” (Webster, 2022)

No doubt there is a place for innovations like artificial intelligence, employer/education/government collaborations, and more to address the labor crisis, but equal focus and effort should be given to getting back to the basics that create a great workplace, and really committing to drive long-lasting progress.

Is It Time for a Quick End-of-Year Equipment or Facility Upgrade?

Have you been thinking about purchasing new or used equipment to enhance services? How about upgrading technology and software or updating your facility?

With end of year approaching, you have limited time left to consider whether to purchase, lease, or finance certain assets to take advantage of Section 179 tax benefits. It’s also a good time to consider how Section 179 may play into your business and tax strategy for 2024.

Section 179 uses first-year expensing. That means you can deduct the expense for an eligible asset immediately, rather than depreciating it over time. It serves as an incentive for a business owner to invest in the business and enhance its capabilities and services with the purchase and installation of capital equipment.

One big caveat: You must put the asset you purchase into service the year that you plan on taking the deduction. With just weeks left in 2023, it will be important to account for this in your planning.

Most small and mid-sized business owners qualify for Section 179 deductions. Qualifying purchases can include office furniture and equipment; computers and software; certain vehicles (some with annual deduction limits); machinery and equipment; and other property used for business. Security systems, HVAC systems, roofs, fire protection systems, and other structural improvements to non-residential buildings may also qualify for a Section 179 deduction.

Equipment can be new or used (as long as you weren’t the prior owner). It can be purchased outright, financed, or leased. So, let’s say you want to purchase qualifying equipment for $1 million and you have $250,000 for the down payment and finance the remaining $750,000. As long as the equipment is put into service this year, you can deduct the full $1 million this year.

Through 2026, there’s an added bonus. For expenses not eligible for the Section 179 deduction, there’s a bonus depreciation allowance in year one. For 2023, bonus depreciation is 80% — remember, that’s in addition to regular depreciation. The bonus depreciation decreases for the next three years (60% for 2024, 40% for 2025, 20% for 2026). Starting in 2027, this additional benefit will no longer be available. Because of this phase out, businesses benefit the most by making capital purchases sooner rather than later.

Section 179 numbers to know for 2023:

Maximum 179 deduction: $1,160,000
Phaseout threshold begins at $2,890,000 and ends at $4,050,000. (So, if you buy eligible assets that cost more than $2,890,000, your maximum 179 deduction is reduced dollar for dollar by amounts over $2,890,000. Purchases above $4,050,000 are not eligible for a 179 deduction, but bonus depreciation can still apply.)
Bonus depreciation: 80%

If you need help determining whether to act quick to take advantage of Section 179 this year or whether to make it part of your tax strategy for 2024, your RBT CPA client manager can help – give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Are Your District’s Students (and Families) Eligible for a Monthly Discount on Internet Services?

We want to make sure you’re aware of a benefit that may be available to families of students in your district: a monthly discount on Internet services (plus other perks) via the FCC’s Affordable Connectivity Program.

Put simply, anyone whose child is eligible for a free and/or reduced price school lunch program or school breakfast program, including at U.S. Department of Agriculture (USDA) Community Eligibility Provision (CEP) schools, may also be eligible for the Affordable Connectivity Program. (There are other ways to become eligible, but this is the one pertinent to this discussion.)

As noted on the FCC website, “The Affordable Connectivity Program is an FCC benefit program that helps ensure households can afford the broadband they need for work, school, healthcare and more.

The benefit provides a discount of up to $30 per month toward internet service for eligible households and up to $75 per month for households on qualifying Tribal lands.

Eligible households can also receive a one-time discount of up to $100 to purchase a laptop, desktop computer, or tablet from participating providers if they contribute more than $10 and less than $50 toward the purchase price.”

Especially with the holidays approaching, eligible families may welcome the opportunity to save at least $30/month or $360/year on Internet, as well as $100 on a laptop, desktop computer or tablet. In addition to bringing some cheer to the holidays, letting eligible families know about the Affordable Connectivity Program may help you begin to build some goodwill prior to the start of budget discussions.

The FCC even makes it easy for you to communicate the program, with a variety of materials including a toolkit containing downloadable flyers, social media messages, infographics, and more. After communicating the program, your part is done.

Any eligible individual interested in the benefit can apply online, via mail or via a participating internet company (click here for instructions). There’s even a tool to help applicants learn about participating companies in their area – click here. Many Internet Service Provider websites include a tool to help determine eligibility for the Affordable Connectivity Program and to apply.

We’re always looking for ways to enhance the value we deliver to our clients (and prospects) and hope this information will prove valuable to you and your district. As with any new program, it’s always a good idea to run it by your legal council before proceeding.

In the meantime, if you need any help with accounting, tax, audit, or advisory services, please know RBT CPAs is always here for you. To learn more, give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

1099 Forms: What Housing Authorities Need to Know and Do

Did you manage a rental property in 2023? Did you pay people who were not your employees to perform services related to the property?

If you answered “yes,” it may be time to get ready for 1099 Forms. Here’s the scoop…

1099 Forms serve as records of income equal to $600 and over that hasn’t been taxed by the IRS. Annually, a person or organization that pays non-employee income of $600 and over must issue the appropriate 1099 Form to the payment recipient, as well as the IRS. For housing authorities, 1099 filings generally include payments made to property owners, attorneys, vendors, and contractors. Failing to send a Form 1099 when required can result in penalties for the housing authority and potential loss of deductions for the property owner. In turn, Form 1099 recipients must include the forms with their annual tax filings and reflect income when required; otherwise, they can be subject to an audit and/or financial penalties.

There are numerous 1099 forms, but two are particularly important for housing authorities: 1099-MISC and 1099-NEC.

1099-MISC is used to report income that isn’t reported on a W-2. This includes:

Rental income, including rent from tenants on a government housing assistance plan like Section 8 or a similar program (for HUD housing, the local housing authority will file the 1099-MISC unless there’s a property manager – in that case, the property manager files the 1099-MISC)
Prizes and awards
Cash paid from a notional principal contract to an individual, partnership, or estate
Fishing boat proceeds
Medical and health care payments
Crop insurance proceeds
Payments to an attorney
Section 409A deferrals
Non-qualified deferred compensation
Other income payments

Of the items above, rent and payments to an attorney likely apply for a housing authority. An authority will use 1099-MISC to report rent totaling $600 or more paid to an owner of a rental property and a separate 1099-MISC to report attorney fees totaling $600 or more.

What about payments to independent contractors and such?

The 1099-NEC form is used to report non-employee compensation totaling $600 or more for a service provided as part of business (including to nonprofit organizations and government agencies). So, a housing authority will file a 1099-NEC for each independent contractor or organization paid $600 or more during the year for services provided on a rental property owner’s behalf. Examples include services provided by landscapers, electricians, plumbers, locksmiths, painters, maintenance workers, cleaning services, pest removal businesses, HVAC providers, bookkeeping/accounting providers, renovators, inspectors, and more. However, 1099-NEC forms are not required for payments made to corporations (unless the organization is also a limited liability company).

Up until November 21, there was a third reporting requirement using Form 1099-K to report payments received from cards, online payment apps and third-party payment networks. However, in a press release issued November 21, the IRS delayed this requirement for another year. The press release noted:

“Following feedback from taxpayers, tax professionals and payment processors and to reduce taxpayer confusion, the Internal Revenue Service today released Notice 2023-74PDF announcing a delay of the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.

As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn’t expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.”

Filing Deadlines

1099-NEC Forms must be filed by January 31 with both the IRS and recipient. 1099-MISC with no data in Boxes 8 or 10 is due to recipients January 31 and the IRS by February 28 (paper) or March 31 (electronic).

New Electronic Filing Requirement Starts in 2024

In February of this year, the IRS expanded electronic filing requirements. If an employer files 10 or more returns of any type – including W-2s and 1099s – on or after January 1, 2024, they must be submitted electronically. Paper submissions are not allowed. The IRS Information Returns Intake System (IRIS) portal or Filing Information Returns Electronically (FIRE) can be used for electronic 1099 filings (NOTE: You must apply in advance to obtain a Transmitter Control Code (TCC) to use IRIS or FIRE). As an alternative, you can ask your accountant to file for you. Failing to comply can result in a $310 penalty for each information return filed on paper.

For more information, please refer to the IRS website or give your RBT CPA client manager a call. We’re here to answer your questions and help with all of your accounting, tax, audit, and advisory needs. Give us a call today.

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