Maloney + Novotny

If you wish to leave a charitable legacy while generating income during your lifetime, a charitable remainder trust (CRT) may be a viable solution. A CRT is an irrevocable trust to which you contribute stock or other assets. The trust pays you income for life or for a term of up to 20 years, then distributes the remaining assets to one or more charities. When you fund the trust, you’re entitled to a charitable income tax deduction (subject to applicable limits) equal to the present value of the charitable beneficiaries’ remainder interest. CRTs are particularly attractive now because they can be more effective in a high-interest-rate environment. Contact us for details.

M+N Shareholders spent the weekend in Grand Cayman strategically planning for 2024 and celebrating a successful 2023.

Every established business will encounter challenges when it comes to succession planning. Family-owned companies, however, often face particularly complex issues. If yours is a family business, always bear in mind that there are solutions to be found. For example, an installment sale of the company to children or other family members can provide liquidity for owners while easing the financial burden on children and grandchildren. Alternatively, owners may transfer business interests to a grantor retained annuity trust (GRAT) to obtain gift and estate tax benefits, provided they survive the trust term. A GRAT also provides a fixed income stream for a certain period. Contact us for more info.

When tools and small equipment are lost, damaged or stolen, the costs can quickly erode profits and cash flow. Barcode technology can help you manage these items more effectively and create accountability among workers. These systems allow you to scan barcodes on items when assigning tools and accepting returns. Tracking software sends this information to a database that can also be used for browsing, billing and running reports. In addition, it can monitor repair histories and maintenance schedules. This technology has become more cost effective, robust and secure in recent years. We can help you upgrade your current system or invest in a new one. Contact us for more information.

M+N's Joan Graziano outlines some notable changes that could impact your company's bottom line in 2024. Read more about how to plan for them:

Ohio business leaders: Be sure you’re accounting for these changes in 2024 As we head into 2024, there is anticipated economic growth coupled with continuing challenges such as inflation, supply chain disruptions, and labor shortages. Here in Ohio, the expectation for business is generally positive and job growth looks to be consistent.Here are some notable changes and…

If you’re like most parents of young children, you’ve put a lot of thought into raising your kids. But have you considered what would happen to them if you (and your spouse if you’re married) should suddenly die? You can avoid a worst-case scenario by appointing a guardian in your will. This can be done easily enough by having your attorney add a clause to your current will or, if warranted, through drafting a new will. Be aware that there’s no definitive “right” or “wrong” choice for a guardian. Every family’s situation is different. What happens if you don’t name a guardian for minor children in your will? The choice will be left to the courts to decide based on the facts.

With a new year ahead, employers need to look at how to handle employee compensation adjustments based on inflation and other factors. At least two recent surveys indicate that salary increases at or near 4% may be the “new norm.” Of course, the percentage increase that your organization decides to provide is entirely up to you. But it’s generally advisable to address and announce pay adjustments within the context of a carefully considered and well-communicated compensation philosophy. It should answer questions such as “Are we using the right benchmarks for adjustments?” and “What employee behaviors are we really rewarding?” Contact us for help assessing the pertinent data points involved.

Smaller businesses may struggle with the financial and administrative burdens of sponsoring their own retirement plans. Thanks to the Setting Every Community Up for Retirement Enhancement Act of 2019, however, a relatively new solution is available: pooled employer plans (PEPs). PEPs are a variation on an existing retirement plan model, multiple employer plans (MEPs), which are qualified plans maintained by two or more employers. But properly designed PEPs avoid some of the restrictive rules that can negatively impact MEPs. PEPs are available from “pooled plan providers,” which include financial services companies, insurers and third-party administrators. Contact us for further info.

Is your business required to report under the Beneficial Ownership Information Reporting Requirement? Click here https://bit.ly./3R24Xrs to read more. If you have questions, contact one M+N's accounting professionals at https://bit.ly/3vJY2d8

In today’s volatile marketplace, your business needs to prepare budgets and forecasts that plan for the financial future. QuickBooks provides budget and forecast features to help you make financial predictions, as well as assess “what if” scenarios to enhance decision-making. This software allows you to create a budget or forecast for the profit and loss statement and the balance sheet, as well as add figures at the customer/job or class level (or both). In addition to producing reports that compare budgets or forecasts to actual results, QuickBooks offers advanced tools for projecting cash flows and creating comprehensive business plans. Contact us at https://bit.ly/2LImLUZ to help you plan for 2024 and beyond.

Maloney + Novotny would like to wish you and your family a very Happy Thanksgiving!

Privately held businesses may not need to incur the cost or effort that goes with formally audited financial statements. You could, for example, opt for a financial statement preparation. This is when a CPA, who’s not even necessarily independent from your company, prepares financial statements using an acceptable financial reporting framework. A preparation provides no formal assurance of accuracy but may be useful for internal purposes. There’s also a compilation. It doesn’t provide assurance either but includes a report indicating that a CPA has read the financial statements and evaluated whether they’re free from obvious material errors. Contact us for help with this important decision.

Buy-sell agreements are a critical tool for closely held businesses and professional practices. The business valuation provisions play a significant role in how the agreements will play out when triggered. Unfortunately, shareholders in a New York law firm recently learned a hard lesson in court: They received only $100 each for their shares, due to a fixed-value provision in the firm’s shareholders’ agreement that was based on book value. While a fixed-value formula is simple to administer, failure to tie that formula to a company’s current fair market value can prove costly. Contact us for help drafting a buy-sell agreement that avoids value-related missteps.

Yesterday M+N and Oswald's young professional groups joined together to volunteer at the Lutheran Men's Ministry in an event organized by the Browns Give Back Foundation.

To ensure that a trust operates as intended, it’s critical to appoint a trustee that you can count on to carry out your wishes. To avoid protracted court battles in the event the trustee isn’t doing a good job, consider giving your beneficiaries the right to remove and replace a trustee. Without this option, your beneficiaries would have to petition a court to remove the trustee for cause, which courts often are hesitant to do. If you’re concerned about giving your beneficiaries too much power, you may want to include a list of successor trustees in the trust document. That way, the next person on the list takes over automatically, rather than the beneficiaries choosing a successor.

If your not-for-profit doesn’t already solicit and accept planned gifts, you may be passing up significant financial support. Donors often need to be educated about the tax and charitable advantages of planned giving through direct bequests, charitable gift annuities, charitable trusts and other vehicles. But first, your nonprofit needs to establish planned giving policies that specify what types of gifts you’ll accept and how you’ll handle them. You can start seeking planned gifts by asking board members to pledge donations. You may also want to contact local financial advisors. If you have questions, ask us for help.

If your business can be defined as a “reporting company” under the Corporate Transparency Act, you may need to comply with new beneficial ownership information reporting rules that take effect on January 1, 2024. Reporting companies must provide information about their “beneficial owners” to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. A beneficial owner is someone who, directly or indirectly, exercises substantial control over a reporting company, or who owns or controls at least 25% of its interests. Indirect control is often exhibited by a senior officer or person with authority over senior officers. Contact us for more information.

Does your business have inventory? A year-end physical count of raw materials, work-in-progress and finished goods is essential to accurately report on your balance sheet and income statement. Before the counting starts, management generally should: 1) order (or create) prenumbered inventory tags, 2) preview inventory for potential roadblocks that can be fixed before counting begins, 3) assign workers in two-person teams to specific count zones, 4) write off any defective or obsolete inventory items, and 5) pre-count and separate slow-moving items into sealed containers. Contact us for guidance on how to perform a physical inventory count and manage your inventory more efficiently.

Restricted stock awards are a popular way for companies to offer equity-oriented executive compensation. Some businesses offer them instead of stock option awards. In a typical restricted stock deal, you receive company stock subject to restrictions (the most common restriction is that you must continue working for the company until a certain date). The major tax planning consideration is deciding whether or not to make a special Section 83(b) election. If you make the election, you’ll be taxed at the time you receive your restricted stock award instead of later when the restricted shares vest. Consult with us before making that decision.

Heads up, business owners! Identity theft is a serious threat that can shut down your company, possibly forever. Among the signs that business identity theft has occurred: A business can’t file a tax return (because a return has already been filed using its ID number); a request for a routine extension is rejected; and tax transcripts obtained by the business don’t match its tax returns. To prevent problems, business owners should install anti-malware, anti-virus software and employ firewalls. Use multi-factor authentication, encrypt and backup sensitive files and limit personnel that have access to these files. Contact us with questions about protecting your business from identity theft.

Calling all Business owners, CIO, COO and other IT related business leaders

Join us November 16th with a panel of cyber security experts. Learn about what it takes to protect your business in 2024. You can’t afford to not adequately covered. Please register here: https://bit.ly/3u7vThW

Congratulations to Beverly Campbell and Mark Venditti!

At the very least, your estate plan should include a legally valid will governing the disposition of assets upon your death. But comprehensive estate planning often goes much further. For instance, you may provide for transfers of assets to a living trust (also known as a revocable trust) to supplement your will. For many, the best part of this strategy is that the trust assets don’t have to pass through probate. You can take an additional step by creating a pour-over will. In a nutshell, a pour-over will specifies how assets you didn’t transfer to a living trust during your life will be transferred at death.

Perhaps you’ve been in this situation: You’re facing an emergency and need some cash. You consider taking money out of a traditional IRA or 401(k) account but if you’re under age 59½, distributions are taxable and generally subject to a 10% penalty. Good news: Beginning in 2024, there will be relief for some employees facing emergencies. The SECURE 2.0 law contains a provision that allows employers with 401(k)s and 403(b)s to offer pension-linked emergency savings accounts to non-highly compensated employees. Contributions will be limited to up to $2,500 a year and will be included in taxable income, but participants won’t have to pay tax when making withdrawals. Other rules apply.

Congratulations Mallory Gifford!

While owning assets jointly with a child or other heir has a certain appeal, it can invite unwelcome consequences that may outweigh potential benefits. For example, owning an asset, such as real estate or a bank or brokerage account, with your child as “joint tenants with right of survivorship” can open transfer tax exposure. Indeed, if you add your child to the title of property you already own, it may be considered a taxable gift of half the property’s value. And when you die, half of the property’s value will be included in your taxable estate. Other pitfalls may include income tax liability and exposure to creditors. These problems may be mitigated with properly designed trusts.

When employees are provided with strong training when hired, and ongoing training as needed, it tends to greatly improve morale, productivity and retention. Many employers overlook the fact that effective training programs are tied to strategic planning. Regularly review your organization’s short- and long-term objectives to identify what employees really need to know how to do. Also, integrate discussions about training into your performance review process. Employees can often tell you the specific and timely ways that they need (or want) to be trained. Both initial and ongoing training are more than just sets of instructions; they’re signs of an employer’s commitment to its employees.

No matter how careful your business is regarding benefits plan compliance, it could receive a request from the U.S. Department of Labor for documents related to your health or retirement plan. Such a request usually initiates a plan audit. These audits generally follow six basic steps: 1) initial document request (via letter or phone), 2) on-site review and interviews (sometimes virtual), 3) investigation findings (submitted via letter), 4) corrections and settlement, 5) fiduciary violations (if assessed, a 20% mandatory penalty applies to recovered amounts), and 6) closing letter following corrections. Legal counsel is strongly recommended. Contact us at https://bit.ly/2LImLUZ for more information and audit support from one of our employee benefit specialists.

Maloney + Novotny wishes you a happy and safe Halloween!

If you merge with or acquire another business, the transaction will have financial reporting implications. Notably, your company’s balance sheet will look markedly different than it did before the business combination. It’s important to correctly identify intangibles, estimate fair value and allocate the purchase price in M&As, even when a deal’s cash-equivalent purchase price isn’t readily apparent. Accounting errors on the acquisition date can lead to restatements and impairment write-offs in subsequent periods. Contact us to get it right from the start. We can help ensure your fair value estimates are supported by market data and reliable valuation techniques.

With the rising cost of college, many families are in search of scholarships. If your child receives one, you may wonder how it affects your taxes. Good news: Scholarships are generally tax-free for students in elementary, middle and high schools, as well as those attending college, graduate school or an accredited vocational school. It doesn’t matter if the scholarship makes a direct payment to the individual or reduces tuition. However, certain conditions must be met. A scholarship is tax-free if it’s used to pay for tuition and fees required to attend the school, and fees, books, supplies and equipment required of students. Room and board, travel, research and clerical help don’t qualify.

If your organization has been operating for any length of time, you’re obviously aware of your obligation to pay taxes under the Federal Unemployment Tax Act (FUTA). It may seem like there’s little you can do to control the cost of FUTA taxes and unemployment insurance benefits. But here are five strategies to consider: 1) Avoid layoffs and retain employees; unemployment tax payments are partially based on how many employees file claims. 2) Train employees thoroughly and appropriately. 3) Handle terminations carefully. 4) Build an intensive knowledge base of your state’s laws, which largely determine eligibility for unemployment claims. 5) Contact Maloney + Nototny for further information and assistance.

Does your company struggle to close its books at the end of each month? Consider these steps to simplify the process: 1) develop a standardized process with formal operating procedures and robust checklists, 2) provide ample time to analyze the data to catch problems before they’re recorded in your financial records, 3) encourage process improvement ideas from your staff, 4) implement a cross-training program that allows flexible staffing, and 5) automate manual processes whenever possible. Closing the books doesn’t have to be a stressful, labor-intensive chore. Contact Maloney + Novotny for more ideas to help streamline your monthly closing process.

M+N's Chris Laboda explains navigating the financial landscape of a private school education.

Navigating the financial landscape of private school education A look at trends impacting the financial state of private schools, as well as strategies that schools can employ to secure their future while ensuring accessibility for a diverse student body.

As a business owner, you might think the only purpose of a valuation is to prepare your company for sale. But an appraisal can serve other purposes as well. For example, if you need a capital infusion to fulfill a strategic objective, a valuation can help you present timely, in-depth financial data to lenders. The process may also enable you to recognize operational weaknesses, so you can devise ways to strengthen these shortcomings. Perhaps you do need to prepare for a transfer of business interests of some variety, such as an acquisition, sale or gift. If so, an appraiser can help you plan for the transaction’s optimal timing, pricing and tax impact. Contact us here https://bit.ly/2LImLUZ for more information.

M+N Shareholder Chris Anderson explains the withdrawal process for ERC claims. Read the full article here: https://bit.ly/3Qp1xQF

Lost profits vs. lost business value: What’s right for your case? In many situations, a business valuation expert will present a company’s alleged damages as lost past and/or future profits. There are unfortunate circumstances, however, when a business interruption is so significant that the company’s value is destroyed and the business itself can no longer operate as a going concern. In such a case, the appropriate measure of damages may be lost business value rather than lost profits. To avoid “double dipping,” estimates of lost profits shouldn’t be combined with estimates of lost value when quantifying economic damages. Contact us here https://bit.ly/2LImLUZ for more information.

Payable-on-death (POD) accounts can provide a quick, simple and inexpensive way to transfer assets outside of probate. Setting one up is as easy as providing a bank or other institution with a signed POD beneficiary designation form. When you die, your beneficiaries just need to present a certified copy of the death certificate and their identification to the bank, and the money or securities will be theirs. Be aware, however, that POD accounts can backfire if they’re not coordinated carefully with your estate plan. Too often, people designate an account as POD as an afterthought, without considering whether it may conflict with their wills, trusts or other estate planning documents.