Eight Tax Questions Restaurant Owners May Want to Consider in the Last Four Months of 2024

Eight Tax Questions Restaurant Owners May Want to Consider in the Last Four Months of 2024

In the blink of an eye, it will be September and there will be just four months left in 2024 to maximize tax credits and deductions for your business.

Here are some questions you may want to think about to make the most of the time left in 2024.

Have you been thinking about purchasing equipment, machinery, certain software, or furniture?

Under Section 179 of the tax code, you can deduct the full purchase price (up to certain thresholds) if you put the item purchased into service this year. As an alternative, you may be eligible for bonus depreciation under Section 168, where you can deduct 60% of a qualified expenditure this year and 40% over the remainder of the item’s useful life. (Bonus depreciation will decrease to 40% in 2025 and 20% in 2026; then, it phases out in 2027.) Before making any purchases, you may want to explore how  energy-efficient equipment can help you reduce ongoing operating expenses.

Are you considering updating your restaurant?

Section 168 bonus depreciation can also be used for certain interior improvements. A cost segregation study may help identify fixed assets that qualify for faster depreciation (just give yourself enough time, as they usually take four to eight weeks to complete). If you own the building where your restaurant operates, additional tax deductions may be available for energy-efficient improvements.

Do you need maintenance or repairs performed on equipment?

As long as the maintenance or repair isn’t to a critical or major component, you may be able to deduct the full cost rather than capitalizing and depreciating it over time.

Are you looking for ways to strengthen your ability to attract and retain employees?

If you meet eligibility requirements, you may receive tax credits for certain benefits you provide to your employees, including health care coverage, retirement benefits, childcare, and education or student loan benefits. In addition, any year-end bonuses you give to employees are tax-deductible.

Are you looking to hire additional help for the holiday season?

Hiring members of certain groups, like veterans or public assistance recipients, may make you eligible for the Work Opportunity Tax Credit (WOTC).

With the holiday season approaching, should you step up marketing efforts?

Like other costs of running your business, advertising, and marketing expenses are usually deductible. You may also want to consider selling gift certificates to boost revenues this year (sales tax won’t apply until gift certificates are used).

If you’re hoping for a year-end burst in sales but worried about ending up with extra food, have you considered food donations?

Donating extra food to qualified non-profit organizations benefits the community and provides tax deductions – as long as you keep good records.

Should you stock up on bulk purchases of nonperishable goods?

It can help reduce your taxable income this year and give you some breathing room on purchases going into 2025.

If answering these questions brings up more questions, please don’t hesitate to reach out to the professionals at RBT CPAs for answers. We offer accounting, advisory, audit, and tax services – as well as estate and gift planning. To learn more, give us a call or send us a message. We would love to have the opportunity to show you how we can be Remarkably Better Together.

 

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

The Role of Financial Due Diligence and EBITDA in Business Transactions

The Role of Financial Due Diligence and EBITDA in Business Transactions

When it comes to buying, merging, or selling a business, financial due diligence is critical. This thorough analysis of a business’s financial health provides a comprehensive understanding of its economic standing, mitigating potential risks and ensuring a fair deal for both parties involved. One factor that plays a significant role in this evaluation is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

EBITDA is a financial metric that assesses a company’s operating performance. It’s essentially the net income with interest, taxes, depreciation, and amortization added back. EBITDA is used to analyze and compare profitability among companies and industries as it eliminates the effects of financing and accounting decisions. In straightforward terms, it reflects the profitability of a business before the influence of non-operating factors.

The importance of EBITDA during financial due diligence cannot be overstated. It delivers a clear picture of a business’s operational profitability by focusing solely on earnings from its core business operations. This enables potential buyers or sellers to make a more informed and objective evaluation of a business’s performance and potential.

EBITDA is an excellent indicator of a company’s financial health, and here’s why. When a potential investor or buyer examines a business, they’re interested in its ability to generate profits. EBITDA provides a more accurate reflection of this, as it excludes non-operational costs and potential tax shields—these are factors that can vary between businesses and industries and can distort the true operational performance of a company.

By using EBITDA, buyers and sellers can compare businesses in the same industry, regardless of size. It allows them to benchmark against industry averages and competitors, providing a fairer and more effective measure for comparison.

It’s important to note that while EBITDA is a useful tool, it should not be the sole determinant in a business transaction. It’s a non-GAAP (Generally Accepted Accounting Principles) measure, which means it can be susceptible to manipulation. Therefore, it should be used in conjunction with other financial metrics and a comprehensive due diligence process to ensure a holistic understanding of a company’s financial health.

If you are planning on buying, merging, or selling a business, RBT CPAs professionals are available to conduct financial due diligence. To learn more about our services and approach, give us a call or send us a message. We would love to have the opportunity to show you how we can be Remarkably Better Together.

 

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

An Update on the New York State Foundation Aid Formula Study

An Update on the New York State Foundation Aid Formula Study

After Foundation Aid and the “hold harmless” provision survived New York’s 2025 budget process, Governor Hochul stated in her 2025 budget press release that education priorities include “a Rockefeller Institute study to examine Foundation Aid and prepare for formula changes next year.” Here’s what happened next…

The Rockefeller Institute embarked on a large Foundation Aid study that included collecting data, input, and feedback from numerous stakeholders, including school families, teachers, staff, administration, boards of education, appointed and elected officials, education experts, and education support and advocacy groups.

In July and August, the Institute hosted five public hearings in New York City, Buffalo, Farmingdale, Laurens, and Guilderland (click the link to see the livestream recording). Hearings featured invited stakeholders to provide testimony and then public comments about potential changes to the Foundation Aid formula.

By early December, the Institute is supposed to share its findings and policy options with the Legislature and the Governor.

Most constituents appear to be on board for changing the Foundation Aid formula, considering it was created in 2007, is based on census data from 2000, and doesn’t reflect how dramatically schools, learning, and demands have changed over the last 17 years.

At the hearings and via other channels, a variety of stakeholders presented their take on what needs to happen. NYSUT and UFT presidents shared their observations about where the Foundation Aid formula comes up short and what it should address. Both also expressed concern that the study focuses on financial sustainability versus providing a quality education.

Union members shared a variety of considerations from schools’ evolving role as a social safety net, geographic isolation contributing to costs, and a formula that uses outdated data to address mental health, housing and food insecurity, and other special needs.

The New York State Council for School Superintendents shared principles for the study, as well as recommendations. An education policy and advocacy organization asserted any changes need to be student and equity-focused, with funds reaching those requiring the most support. Budget watchdog groups and education law groups have their own opinions on the matter. One group is going as far as creating its own fair and equitable Foundation Aid formula.

(Even before the Rockefeller Institute study, the Association of School Business Officials drafted a State Aid Proposal and the NYS Educational Conference Board  shared their recommendations for a Foundation Aid formula review.)

Although the Rockefeller Institute’s final public hearing was held on August 14, stakeholders can still share input via an online form through Friday, September 6, at 11:59 pm (EST). In fact, a number of school districts have shared information about the public hearings and online form to engage their communities in the discussion (and perhaps set the stage for Foundation Aid changes).

As you work to stay abreast of how Foundation Aid may change and what it may mean to your district, please remember you can count on RBT CPAs for your accounting, advisory, audit, and tax needs. Learn how we can be Remarkably Better Together. Contact us today.

 

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

Does Your Construction Business Need to Register to Pay Taxes in Another State?

Does Your Construction Business Need to Register to Pay Taxes in Another State?

Understanding and complying with nexus laws is critical for construction companies operating across state lines and within certain municipalities.

Nexus determines where a company has state or local tax obligations, which can be triggered by various factors. Once triggered, a company must register its business, collect sales tax, and file tax returns.

One of the most common triggers of nexus is economic activity. In general, economic nexus can be triggered when a company’s sales and/or number of transactions exceed a particular threshold. Thresholds vary by state and are subject to change. For example, in New Jersey economic nexus is triggered when you reach $100,000 in sales or have 200 or more separate transactions. In Florida, it’s triggered after $100,000 in sales.

There are additional triggers like physical nexus, which may occur when a business has people (i.e., employees, subcontractors, agents, remote workers, and more) or property (i.e., a storage warehouse) in another state.

A company must obtain a business registration in any state where it has nexus, collect taxes on sales, and regularly file sales tax returns. Registration deadlines vary by state. For example, in New York, it’s 30 days after meeting the threshold. For Florida, it’s the first day of the next calendar year.

Timely compliance is crucial. If a company doesn’t register as a taxpayer by a state’s deadline after nexus is triggered, it can face back taxes for the period it operated in the state without remitting sales tax. The company might also be liable for penalties and interest. In some cases, the state could hold the company’s owners or officers personally responsible for unpaid taxes.

Here are a few of the more common questions we hear about nexus and their answers:

How do I know if my construction business triggered nexus in another state or municipality?

Laws differ by states and even certain local municipalities, so it’s important to review local laws or consult a tax professional. Be aware that activities like subcontracting, storing materials, or temporary work assignments might trigger nexus. Also, different types of taxes (sales, income, franchise) have different nexus standards.

What do I need to do and by when if my construction business triggers nexus in another state or municipality?

You’re required to obtain a business registration, collect appropriate taxes from customers, and regularly file tax returns in that state or municipality. Deadlines for registration vary.

Does nexus impact payroll taxes for construction contractors and subcontractors?

If contractors or subcontractors perform work or have employees in a state where they establish nexus, they may be required to withhold and pay payroll taxes in that state.

Do I need to account for nexus in my bidding process?

If you are bidding on an out-of-state project, you should understand how nexus may impact your budget and bottom line. You want to avoid getting into a situation where not accounting for local sales taxes results in unexpected liabilities that reduce profitability.

The preceding information provides highlights – the many ways your business may trigger nexus and the resulting obligations are complex and varied. RBT CPAs tax professionals are available to help you understand and navigate nexus, so instead of worrying about tax obligations and repercussions, you can focus on managing your business and driving success. To learn more, contact RBT CPAs today.

 

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

What Local Union Leaders Need to Know About Recordkeeping Requirements

What Local Union Leaders Need to Know About Recordkeeping Requirements

The Labor-Management Reporting and Disclosure Act (LMRDA) contains recordkeeping requirements for financial records that clarify or verify reports filed with the Office of Labor-Management Standards (OLMS). A union’s treasurer and president (or other corresponding principal officers) are responsible for ensuring their union meets these recordkeeping requirements.

After a report is filed with the OLMS, records must be maintained for five years. This includes all records used in the normal course of doing business and used to complete, read, and file the report (i.e., electronic documents and recordkeeping software). These records verify OLMS reports are complete and accurate.

Per an OLMS Fact Sheet providing guidance on LMRDA recordkeeping requirements, examples of records that should be retained include, but aren’t limited to:

  • Receipts and disbursement journals
  • Cancelled checks and check stubs
  • Bank statements
  • Dues collection receipts
  • Employer checkoff statements
  • Per capita tax reports
  • Vendor invoices
  • Payroll records

In addition, unions should retain records that help explain or clarify financial transactions, including:

  • Credit card statements and itemized receipts for each credit card charge
  • Former members’ ledger cards
  • Bank deposit slips
  • Bank debit and credit memos
  • Vouchers for union expenditures
  • Internal union financial reports and statements
  • Minutes of all membership and executive board meetings
  • Accountants’ working papers used to prepare financial statements and reports filed with OLMS
  • Fixed assets inventory

If you are not sure about whether to keep a record, you can contact the nearest OLM field office for advice.

A quick scan of Compliance Audit Program outcomes from audits conducted thus far in 2024 very clearly shows details matter. From failing to record a vending machine’s beverage sales and missing itemized receipts for meal expenses to not having an inventory of property that was discarded and failing to obtain countersignatures on all checks, audits are uncovering numerous issues (although many simply require the issue be fixed going forward).

Unions are subject to other recordkeeping requirements related to financial reports (where records must be retained for seven years), as well as staff, their pay, and benefits. Refer to your union’s policies and handbook for details.

As you work to keep your union in compliance with recordkeeping requirements, you can count on RBT CPAs for all of your accounting, advisory, audit, and tax needs. Learn how we can be Remarkably Better Together by contacting us today.

 

RBT CPAs never offshores work outside of the U.S., so you always know who is handling your financial information.

NOTE: RBT CPAs is not a law firm and the content in this article should not be construed as legal advice. Should you have questions, it’s in your best interest to contact your legal counsel.