The Many Hats of an Accountant

There are so many facets of an accountant's role in Small Business, the first of which is to get to know yours!  Understanding the different needs of different small businesses is vital to our role in helping them be successful - there is no one-size-fits-all solution as you can read about in the unique solutions we found for Paisley & Jade.  This article sheds light on the many ways we can help you!

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It's a Bird, It's a Plane: The Four Financial Superheroes That Will Benefit Your Small Business
By: Bryce Welker
Forbes.com

Accountants are no longer confined to “bean-counting” tasks. The days of pocket protectors and short-sleeved shirts with ties are long gone. Now, accountants are viewed as superheroes (or violent hitmen if you’ve seen the Ben Affleck movie, The Accountant) who save businesses from financial risks and lead monetization efforts.

Having an accountant by your side as you make business plans for the future is the best way to ensure you are protected from any potential financial dangers. An accountant’s detailed knowledge of trends or tax laws, and his or her fiscal expertise, in general, will take down any villainous threats that could be looming on the horizon.

Not all businesses need a traditional accountant but having someone on your team who really knows finance can help you in a variety of ways. They can act as an advisor who can improve ineffective operational systems that cut company margins. If you are showing quarter-over-quarter growth, you may not be aware of any waste in the design of company procedures. An expert in money management will be able to easily spot inefficiencies and find ways to lower expenses or increase sales.

I realized my accountant was my hero when I began to have more and more time at work after delegating to him. Even though I had accounting knowledge, I needed to concentrate on running other areas of the company. As a CPA and CEO, I knew I had an advantage over other CEOs when it came to financial planning, but I didn’t want to devote too much of my workday to those tasks. An accountant can help with anything from preparing client proposals to pinpointing risks in need of mitigation. A skilled accountant can find missed deductions or help avoid a costly audit by carefully preparing tax filings. And with the changing times, accountants’ roles are also evolving every day.

The Changing Role Of The Accountant

Obviously, key accounting tasks like bookkeeping remain a focus. But technological advancement has prompted a shift away from strictly dealing with numbers to providing broader services that not only calculate, but also analyze. Now, accountants can act as specialists in many areas of business, and clients are welcoming this type of support.

Not all accountants wear capes and wield calculators. Let’s look at some of the undercover financial superheroes:

1. Business Analysts: Accountants are constantly working with data, like the company’s profits and losses. This data is one part of a larger puzzle. Look for a specialist who has the ability to see the details and the bigger picture. The powers of a business analyst can help you synthesize the company’s data and determine how different initiatives fit together. A good business analyst needs to have a strong background in accounting and a knowledge of programming languages like Python.

2. Entrepreneurs: Throughout an accountant’s career, they will experience different business needs and meet all sort of clients. An accountant will start to see the gaps for products or services that don’t exist. And that’s exactly what happened to me: I was a CPA and entrepreneur when I saw a niche that had a need. By having a strong understanding of financial implications when starting a business, accountants can become very successful entrepreneurs. So if you have aspirations to become a entrepreneur, start with a foundation in finance.

3. Investor Relations Specialists: Accountants make great investor relations specialists because of their background in finance and their ability to quickly understand and strategically communicate all elements of the company to different audiences. Look for an investor relations specialist with top-notch communication, analytical and reporting skills if you struggle with clear communication between your company and investors. Not all businesses need this type of specialist.

4. IT Specialists: Like many other things in this world, a lot has changed with technological advancements. Software and information systems play a critical role now more than ever. And in order for any business to be efficient, they need to integrate IT into their business. An accountant's knowledge and experience with multiple IT systems can offer companies valuable insight that can increase efficiency. IT specialists can advise and guide a business on its IT choices and ultimately save the company money by creating more effective systems.

You might not think you need an accountant in the traditional sense. But there are so many ways financial know-how can benefit your company. A CPA will be able to fit into most positions, given their experience and expertise. Even if you don’t have an immediate need, consider opening a line of communication with a CPA who you may want to bring on in the future, at least part time. If your business is growing, it's a smart choice.

10 Questions to Ask Your Accountant

A few of the questions from this article are about how the client can accommodate the accountant. At Accounting Works, we more often than not work the other way around.  Small businesses are so important to us, (in fact, we are a small business ourselves) that we know there is not one template that fits all of our clients' needs.  Working with clients on their current state of affairs as well as reaching toward future business goals is as important to us as it is to you!

10 Questions to Ask When Working With an Accountant

By Kim Lance Shandrow
Entrepreneur.com

Solely relying on free or inexpensive online small-business accounting tools instead of investing the services of a trained professional accountant can be a costly mistake that entrepreneurs make all too often. Don’t be one of them.

Springing for a licensed accountant can be worth every extra penny you spend, says ff Venture Capital chief financial officer Alex Katz. A qualified, certified public accountant (CPA) can tip you off to potentially irreversible financial missteps and brand new tax savings opportunities that you might not know exist. And we doubt most barebones digital accounting solutions could bring red flags like these to your attention as effectively as an accountant.

When you do invest in the services of a reputable accountant, it’s important to know what to ask and when -- not only to be sure you’re getting your money’s worth, but also to ensure he or she helps you do what’s best for your business and your bottom line.

1. What’s the best way to contact you and how often should we be in touch?

This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.

2. How can you help me prepare for (and survive) tax season?

Untangling the time-sucking tedium of tax prep is often the number-one reason small businesses hire an accountant in the first place. You’ll want to ask yours which tax credits and deductions you should claim. Also ask him or her if there are any new tax laws you should take advantage of to maximize write-offs.

“Tax opportunities, such as the R&D credit, accelerated depreciation or panoply of state and local tax opportunities, including tax forgiveness and outright grants or refundable credits, can even be applied for as part of the tax return process,” Katz says.

He suggests that you get answers to all of your tax questions long before the April 15 filing deadline. To avoid the year-end rush, get your accountant involved in helping you gather all of the necessary accounting documents and data all throughout year.

3. What are some considerations I should consult with you about on an ongoing basis?

A skilled accountant should get to know you and your business well enough to regularly keep you aware of -- and swiftly and appropriately reacting to -- an array of factors that could effect your bottom line, for better or for worse.

Your accountant should be well-versed in several disciplines, “including but not limited to GAAP [generally accepted accounting principles], corporate and individual tax, retirement planning and financial planning," Katz says.

He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more.

Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future, ideally without the usual confusing accounting jargon. “If an entrepreneur in unable to develop that type of relationship with her accountant, it may be time to look for a new one,” Katz warns.

4. How can you help me grow my business?

A qualified accountant absolutely can help small-business owners expand over time, that is if have the right groundwork in place with you, Katz says.

To grow, you must start with a financial model that is “honest and built on a granular basis from the ground up.” Remember to update your plan on a monthly basis (or ask your accountant to) with actual results. Doing so can help you hone in on opportunities for growth in your market.

5. How can you help me clamp down on my cash flow?

Properly projecting your business’s cash flow is as essential as creating an effective mission statement and living up to it. Tedious, detailed flow projections aren’t easy to wrangle, but that’s what you have an accountant for.

Your accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.

6. What is my break-even point? 

Your account should be able to analyze a number of metrics to calculate whether your business is making a profit or a loss. Knowing your break-even point is crucial to determining your business’s pricing structure and profitability. Once your accountant helps you identify yours, you should have a strong estimate of how many products or hours of service you have to sell to cover your costs.

7. Can you assess the overall value of my business?

Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method.

Another way your accountant can help nail down your business’s value is by deeply understanding what you do and the industry in which you operate, Katz says. “In so doing, an accountant can help the entrepreneur understand which aspects of the comparable companies drive their value, and can work with the entrepreneur to steer the company toward maximizing those aspects of their business.”

8. Can you help me review and negotiate business contracts before I sign them? 

This is a common question for accountants, one that’s probably better to ask your attorney.

“An accountant should not practice law without a license,” Katz says. “They can work collaboratively with your attorney to add color and tax and commercial issues about which the attorney may not be experienced.”

9. What are some special considerations for my particular industry?

Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.

For instance, if you own a startup that builds wearable tech, your CPA should be well-versed at identifying tax opportunities specific to the emerging technology industry, like potential R&D, facilities and training tax credits, as well as applicable manufacturing and sales tax exemptions, etc.

10. What are some common mistakes that I should avoid when working with you?

Not being 100 percent honest with your accountant is the worst mistake you could make, Katz says. “The truth will come out, either in the planning stage or in front of the IRS auditor.”

Failing to follow the advice of your accountant is another common mistake Katz sees. The whole point of hiring an accountant is for their expert advice. Thoughtfully consider it, then use it to make reasoned, balanced judgments.


Click here for the original article.

Paisley & Jade: Unique Solutions for a Unique Business!

Paisley & Jade, a vintage and specialty rental company, will celebrate their 5th Anniversary of being in business this summer. As a specialty prop house their warehouse stores furniture, accessories, some in-house made specialty items, and lots and lots of chairs! Annually, they supply a gamut of events from weddings, to trade shows, to film, theatre and ads.  Perkins Morgan and Morgan Montgomery, the co-owners of P&J call it, “Hoarding with a business license.” Now that Spring has arrived and events are around every corner, their feet barely hit the ground.  With schedules, logistics and a warehouse of goodies to keep track of, it left the owners little time to worry about their small business accounting needs. After going through a “handful of doozies,” they reached out to Accounting Works owner, Stephen Fishel, to find the solutions they desperately needed.

Photo Credit: Michael Thompson, RichmondBizSense.com

With such a unique and seasonal business, they had some interesting accounting challenges to face. Both Morgan and Perkins knew Stephen as the accountant for a local catering company, where the pair worked prior to starting P&J. After being frustrated with previous accounting firms’ approach, they contacted Accounting Works.




"Something he said always stuck with me," recalled Morgan, “He said that he could always advise on what the right financial decision is, but that might not be the right business decision.”

A custom table top designed and fabricated in-house.

They’ve been working with him for over a year now and couldn’t be happier.

“Off the bat, he offered to come to us, which is huge.” Said Perkins, their previous experience had been with accountants trying to stuff their business model into the rigid guidelines of the way they did things, not the other way around. They recalled a placard mounted in one office that read ‘You can’t fix stupid.’ And that’s how they felt, “They hated questions, they thought we ‘didn’t get it,” and after contacting Stephen, he “apologized for our bad experience,” they said laughing. “We just love Stephen, our meetings with him he makes really fun, jovial and personable.”

Photo Credit: KatelynJamesBlog.com

Morgan had a two-page bullet point list of things they needed to change or fix with their accounting practices.  “We struggled with HOW to do our bookkeeping,” they said, “one trip to Lowe’s could have 10 different categories on one receipt; asset purchase, office supply, warehouse supply…” but after working with Stephen, they came up with a custom method that was much more streamlined, with “way less of a delay to crunch month-end numbers.”

According to the P&J duo, their cash flow improved as well, “he did a great job researching because it’s such a niche business.”  Cash flow is critical to year-long survival for any business with seasonal variability.  “Other accountants blindly guessed, but he took the time to get to know us.”  They noticed an immediate flexibility of resources once they started working with Stephen and implementing the systems they put in place.

A wall of decorative accessories is every designer's dream.

Like Paisley & Jade, many small businesses struggle to find accounting solutions to fit their needs.  And like Paisley & Jade, it’s okay not to fit in one particular box or another! Diversity is the spice of our Richmond community, which is why Stephen of Accounting Works has dedicated his practice to finding practical solutions for small businesses!

To LLC or not to LLC?

If you're thinking about taking the leap this year and finally organizing your business as an LLC, now is a great time to consider it!  It can protect your business as well as offer tax incentives for its members.  Here are some points to consider when deciding how to structure your small business.

LLC: Pros and Cons of a Limited Liability Corporation
By Andrew L. Wang
Nerdwallet.com


The limited liability company was first offered as an option for structuring businesses 40 years ago in Wyoming. By the late 1990s, all states had laws authorizing the organizing of businesses under the hybrid structure. Today, LLCs are growing faster than any other business type, according to the IRS.

What is an LLC?
An LLC is a business structure that combines the simplicity, flexibility and tax advantages of a partnership with the liability protection of a corporation. An LLC can have one or many “members,” the official term for its owners. Members can be individuals or other businesses, and there is no limit to the number of members an LLC can have.

About 2.4 million U.S. businesses identified as LLCs in 2014, according to the latest figures available from the IRS. Take a look at these advantages and disadvantages to help you decide whether an LLC is the right structure for your business.
Small Business LLC Pros and Cons

LLC: The Pros
Choosing to structure your business as an LLC offers a number of advantages:

Limited Liability
Members aren’t personally liable for actions of the company. This means that the members’ personal assets — homes, cars, bank accounts, investments — are protected from creditors seeking to collect from the business. This protection remains in place so long as you run your business on the up-and-up and keep business and personal financials separate.

Pass-Through Federal Taxation On Profits
Unless it opts otherwise, an LLC is a pass-through entity, meaning its profits go directly to its members without being taxed by the government on the company level. Instead, they’re taxed on members’ federal income tax returns. This makes filing taxes easier than if your business were taxed on the corporate level. And if your business loses money, you and other members can shoulder the hit on your returns and lower your tax burdens.

Management Flexibility
An LLC can opt to be managed by its members, which allows all owners to share in the business’s day-to-day decision-making, or by managers, who can be either members or outsiders. This is helpful if members aren’t experienced in running a business and want to hire people who are. In many states, an LLC is member-managed by default unless explicitly stated otherwise in filings with the secretary of state or the equivalent agency.

Easy Startup and Upkeep
Initial paperwork and fees for an LLC are relatively light, though there is wide variation in what states charge in fees and taxes. For example, Arizona’s filing fee for articles of organization is $50, while the fee in Illinois is $500. These variations aside, the process is simple enough for owners to handle without special expertise, though it’s a good idea to consult a lawyer or an accountant for help. Ongoing requirements usually come on an annual basis.

LLC: The cons
Before registering your business as an LLC, consider these possible drawbacks:

Limited Liability has Limits
In a court proceeding, a judge can rule that your LLC structure doesn’t protect your personal assets. The action is called “piercing the corporate veil,” and you can be at risk for it if, for example, you don’t clearly separate business transactions from personal, or if you’ve been shown to have run the business fraudulently in ways that resulted in losses for others.

Self-Employment Tax
By default, the IRS considers LLCs the same as partnerships for tax purposes, unless members opt to be taxed as a corporation. If your LLC is taxed as a partnership, the government considers members who work for the business to be self-employed. This means those members are personally responsible for paying Social Security and Medicare taxes, which are collectively known as self-employment tax and based on the business’s total net earnings.

On the other hand, if your LLC files forms with the IRS to be taxed as an S corporation, you and other owners who work for the company pay Social Security and Medicare taxes only on actual compensation, not the whole of the company’s pretax profits.

Consequence of Member Turnover
In many states, if a member leaves the company, goes bankrupt or dies, the LLC must be dissolved and the remaining members are responsible for all remaining legal and financial obligations necessary to terminate the business. These members can still do business, of course; they’ll just have to start a whole new LLC from scratch.

How to Start Your LLC

• Choose a name: Register a unique name in the state where you plan to do business. To make sure someone else doesn’t have your business name, do a thorough search of online directories, county clerks’ offices and the secretary of state’s website in your state — and any others in which you plan to do business. For a fee, many states let applicants reserve an LLC name for a set period of time before filing articles of organization.
• Choose a registered agent: The registered agent is the person you designate to receive all official correspondence for the LLC. It’s crucial that you nail down who this person will be before filing articles of organization, because states generally require you to list a registered agent’s name and address on the form. Though people within the company are usually allowed to serve in this role, states maintain lists of third-party companies that perform registered-agent services.
• File articles of organization: This is the step that essentially brings your LLC into existence. States request basic pieces of information about your business, which, if you’ve thought through your business plan and structure, should not be hard to provide. You’ll be asked to supply details like name, principal place of business and management type.
• Get an employer identification number: The IRS requires any business that has employees or operates as a corporation or partnership to have an EIN, a nine-digit number assigned to businesses for tax purposes. The rule applies to LLCs because, as creations of state laws, they’re classified for federal tax purposes as either a corporation or a partnership.
• Draw up an operating agreement: Your operating agreement should include specific information about your management structure, including an ownership breakdown, member voting rights, powers and duties of members and managers, and how profits and losses are distributed. Depending on the state, you can have either a written or oral agreement. Many states don’t require one, but they’re a useful thing to have.
• Establish a business checking account: It’s generally good housekeeping to keep business and personal affairs separate. Having a separate checking account draws a bright line between the two. This is critical if you want to mitigate any potential risk to your personal assets if a lawsuit calls into question your business practices.

To view the original article, click here.

Analyzing Income Statements

As a small business owner, it's important to track your growth to remain sustainable. It's much more of a month-to-month task than it is for larger corporations.  But being able to interpret your finances once you track them is equally vital to sustainability. Here are two ways to analyze your income statement as an investor in yourself and your business and to potentially attract outside investors!

2 Ways to Analyze an Income Statement

By John Szramiak 

March 19, 2017

As an investor, you should be digging in to a company’s financial statements.

However, you can’t look at these financials in isolation – it’s important to compare a company’s results to other companies in the selected industry, companies outside of the industry, and against other years to determine whether or not that company might actually be an attractive investment.

This causes difficulties, since it’s hard to compare companies of different sizes. For example, if Company A has $3,000,000 of debt outstanding and Company B has $30,000,000 of debt outstanding, is Company A less risky than Company B? We have no way of knowing, because we don’t know the cash positions of Companies A and B, how profitable Companies A and B are, etc.

Fortunately, there are two forms of analysis that we can perform that will help us look at income statements and balance sheets of different sizes, so that we can compare apples-to-apples – they are: horizontal analysis and vertical analysis.

Both are very easy to understand. Let’s start with horizontal analysis.

WHAT IS HORIZONTAL ANALYSIS?

Horizontal analysis, also called time series analysis, focuses on trends and changes in numbers over time. Horizontal allows you to detect growth patterns, cyclicality, etc. and to compare these factors among different companies.

As an example, let’s take a look at some income statement items for Apple and Google.

It’s almost impossible to tell which is growing faster by just looking at the numbers. So we have to do some calculations. We can perform horizontal analysis on the income statement by simply taking the percentage change for each line item year-over-year.

By using horizontal analysis, we can now clearly see that Google’s revenue, gross profit, and EBITDA grew faster than Apple’s in every year except for 2015. We can even take this one step further by calculating the compound annual growth rate for each line item from 2012 to 2016 (you can do this in Excel by using the function: =rate(nper, pmt, pv, fv)) – this tells us the average rate the companies grew in each year.

Our horizontal analysis (time series analysis) is now officially complete.

WHAT IS VERTICAL ANALYSIS?

Vertical analysis, also called common-size analysis, focuses on the relative size of different line items so that you can easily compare the income statements and balance sheets of different sized companies.

Let’s go back to our income statement items for Apple and Google. Through our horizontal analysis, we know that Google has been growing at a faster and more sustained rate than Apple… but is it a relatively more profitable company? Do both companies profits seem to be sustainable?

To perform vertical analysis (common-size analysis), we take each line item and calculate it as a percentage of revenue so that we can come up with “common size” results for both companies.

Here are just the numbers once again. I’ve added a line for research & development costs as well.

Now, let’s divide each line item by revenue.

So what does this tell us?

For starters, in 2016, Apple generated $0.39 for every $1 dollar in sales it made. Google did much better, generated $0.61 for every $1 in sales it made. However, Google’s other costs (such as sales, marketing, general & administrative, and R&D) are much higher, since Google’s EBITDA margin was 33.7%, compared to Apple’s 34.0%.

We can also look at trends within this vertical analysis. For example, Apple’s gross profit has declined from 43.9% in 2012 to 39.1%, while its R&D expenses as a percentage of revenue have increased from 2.2% to 4.7% over the same time period. This could suggest that Apple is facing tough competitive pressures. Why?

• Trends in gross margin generally reveal how much pricing power a company has. Because Apple’s gross margin is declining, this probably means that (a) Apple is dropping the price of its products to match lower cost competitors, (b) Apple’s costs to produce its products are increasing and Apple is unable to increase prices to offset this, or (c) a combination of both.
• This increase in R&D suggests that Apple is doubling down its efforts to create new, innovative products to offset its competition.

HORIZONTAL AND VERTICAL ANALYSIS OF THE BALANCE SHEET

Just like we performed horizontal and vertical analysis on the income statement, we can also run these calculations on the balance sheet (when performing vertical analysis of the balance sheet, line items are usually taken as a percentage of total assets). The process to calculate these ratios is similar to the examples we went through above and are fairly straight forward.

However, I’ve found that horizontal and vertical analysis of the balance sheet is much less helpful than on the income statement (ratios and YoY growth rates are basically requirements when analyzing any income statement) and can often be distorted by accounting policies (for example, is a debt-to-equity ratio really useful if the equity number used is simply a result of various accounting choices made over the years?).

Rather than calculate a “pure ratio” of the balance sheet, we can instead calculate “mixed ratios” – such as an interest coverage ratio (operating income / interest expense), leverage ratio (debt / EBITDA), or even efficiency ratios like days sales outstanding (DSO) and days payable outstanding (DPO).

Reblogged from BusinessInsider.com. To view original article, click here.

Employee Benefits that Count as Taxable Income

As a small business owner, you always want to save wherever you can, but that doesn't mean cutting corners.  Cutting corners, like NOT hiring a professional to do your taxes or payroll could end up in either losing you money or making an error like deducting employee benefits you shouldn't (Number 6!).  That's why Accounting Works is offering affordable and competitive prices on Payroll Services to all small businesses.  With accounting software that allows employees to download their own W2s and Paystubs, you don't have to worry about going back and forth.  Not to mention our tax expertise to find you opportunities to save money and grow your business.

Credit: Getty Images

7 Employee Benefits You Didn't Know Were Taxable Income
With tax season upon us, it's important to understand what employee perks and benefits will count towards your employees' taxable income.

By Rebecca Wessell

With more perks and benefits becoming standard (and with tax day coming up), it's important to know which perks are considered taxable income for your employees. Here are some perks you may not realized are considered taxable by the IRS:

1. Gym or health memberships
I didn't know this one until recently (when our company offered us gym memberships), but the IRS considers a gym or health membership a fringe benefit, and therefore taxable income. The IRS will tax you on the fair market value of the gym membership, so if the gym membership is $50 per month, your employees will be taxed on that extra $600 per year.

One exception to this is if the gym facility is on-premise or employer-owned. In this case, employees won't typically be taxed on the gym, and the employer can usually write it off as a deduction. This is how big companies like Google can provide truly free gym memberships for their employees.

2. Business frequent flyer miles converted to cash
You probably knew that cash gifts to employees are considered taxable income, but you probably didn't know that the IRS doesn't care how the cash becomes cash in your employee's hands.

If you have a small business or corporate credit card and you allow employees to convert your business's points or frequent flyer miles for cash, that may be considered taxable income.

3. Season tickets
While providing infrequent or one-off tickets to events is considered a "de minimis" fringe benefit (and not taxable), providing season tickets can taxable. Depending on how expensive the season tickets are, this could be a pretty considerable tax burden to your employees.

It may be more cost-effective to your employees to provide the occasional ticket rather than a season pass.

4. Clothing
If you provide clothing to your employee that can replace everyday clothing (i.e., not a uniform), this may also be taxable. This doesn't include providing company t-shirts once a year or small value items.

However, if you frequently give your employees clothing and it amounts to a significant amount, they may need to pay taxes on them.

5. Vacation expenses
With some companies now providing "paid paid vacation" for their employees, you should also know that the IRS considers that a taxable fringe benefit. If your business pays for any vacation expenses for its employees, whether airfare, hotels or meals, this must be included in the employee's gross income.

Another kicker? None of these expenses is deductible to you as the employer.

6. Spousal travel or meals
There are some exceptions to this rule. Namely, the exceptions are if the spouse is also an employee or is there for a genuine business purpose, or if the expense would be deductible by your employee anyway.

Otherwise, any expenses, such as food, lodging or travel, covered for your employee's spouse will be taxed come April.

7. Personal use of employer vehicle
If you provide cars or other vehicles for employees, the employee's personal use of the vehicle will be taxed. This includes commuting to and from work, running personal errands or letting a non-employee use the vehicle.

And it's important to keep good records. Because if you don't keep records on when the employee uses the vehicle for business or personal purposes, then all of the usage will be taxed.

To view original article visit Inc.com

What You Need to Know About Robo-Advisers

As our society continues to automate, Robo-Advisers have become a mainstay in the financial sector. Basically, Robo- Advisers are computer programs that use algorithms to provide investment advice. This article from the Journal of Accountancy gives an overview of the service and what to watch out for.


By Ken Tysiac
February 23, 2017

Robo-advisers represent a substantial segment of the financial services industry, and their rise presents challenges to the investment advisers who operate them and the investors who use their services.

Popular especially with younger, tech-savvy investors, robo-advisers use computer algorithms to provide investment advisory services online, often with limited human interaction. These services may charge lower fees but may not provide the level of personal service that traditional investment advisers deliver.

Information and guidance related to robo-advisers for both investment advisers and investors was published Thursday by the SEC.

The SEC’s Division of Investment Management issued guidance for investment advisers on meeting disclosure, suitability, and compliance obligations under the Investment Advisers Act of 1940. The guidance includes suggestions that a robo-adviser:

Should consider providing clients with a statement that an algorithm is used to manage individual client accounts, a description of the algorithmic functions used, and a description of the assumptions and limitations of that function.
May wish to consider whether its client questionnaires elicit sufficient information from clients to conclude that its investment advice is suitable and appropriate for the client.
Should consider adopting written policies and procedures in addition to those that address issues relevant to traditional investment advisers. Additional policies and procedures may address areas such as the development, testing, and backtesting of the algorithmic code; disclosure to clients of changes to the algorithmic code that may affect their portfolios; and cybersecurity issues.
Meanwhile, the SEC’s Office of Investor Education and Advocacy issued an investor bulletin containing information investors may need to make good decisions if they consider using robo-advisers. According to the bulletin, investors may wish to consider:

• How much human interaction is important to them, their level of financial literacy, and how often they will have contact with the robo-adviser.
• What information the robo-adviser is using to create its investment recommendations.
• What the robo-adviser’s approach is to investing.
• What fees and costs the robo-adviser will charge.
• Information about the robo-adviser’s licensing and registration.
• “As technology continues to improve and make profound changes to the financial services industry, it’s important for regulators to assess its impact on U.S. markets and give thoughtful guidance to market participants,” SEC Acting Chairman Michael Piwowar said in a news release.

—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.