Monday, November 30, 2009

Tips for increasing profit and cash flow

The Journal of Accountancy provides nine suggestions for builders and contractors to increase profits, including:
  • Take every available tax credit.
  • Save on workers’ compensation insurance with safety programs.
  • Update overhead percentages.
  • Hold a weekly collection meeting.
  • Manage subcontractors and material suppliers to the project schedule.
  • Partner with subcontractors and suppliers to win bids.
  • Set up a rolling cash flow projection.
  • Close out pending change orders and backcharges weekly.
  • Take advantage of the U.S. Small Business Administration’s new American Recovery Capital (ARC) Loan Program.
The full article is available here. Previous posts on Small Business Administration loans are available here:

SBA training on winning federal contracts Subcontracting to Snag Stimulus Dollars How to Win Federal Contracts 6 Tips to Speed up SBA Loan Approval Recovery Funded Ultra-Low Interest Loans The ABCs of SBA Lending Interest-free SBA Loans

Wednesday, November 25, 2009

Newsletter on Year-End Tax Planning

Our firm sends an occasional e-newsletter on such topics as tax planning, current tax developments, and important compliance matters. Our most recent e-newsletter on year-end tax planning for 2009 includes discussion about such items as:
  • Expiring opportunities in depreciation.
  • Expiring deduction for sales tax on new car purchase.
  • Extended carryback period for business losses.
  • Extended & Expanded Homebuyer Credit.
  • Energy credits.
  • Charitable donations.
  • 401(k) contributions.
  • Health savings accounts (HSAs).
  • Health flexible spending accounts.
  • Dependent care FSAs.
  • Self-employed plans.
  • Retirement income.
  • IRA conversion.
  • Capital losses.
  • Income Deferral.
  • AMT Considerations.
  • Gift tax.
  • Kiddie tax reminder.
If you would like to read the full newsletter, or subscribe for future newsletters, you may visit our Newsletter Archives.

Friday, November 20, 2009

Expansion of 5-year carryback election for NOLs

On Nov. 6, 2009, President Obama signed the “Worker, Homeownership, and Business Assistance Act of 2009” (the 2009 Assistance Act) into law. The Act includes tax changes for businesses, the most significant of which are liberalized rules for certain net operating losses (NOLs). If your 2008 or 2009 tax return results in a net operating loss, you may benefit from this provision.
A net operating loss (NOL) is the excess of business deductions (computed with certain modifications) over gross income in a particular tax year. The loss can be deducted, through an NOL carryback or carryover, in another tax year in which gross income exceeds business deductions. In general, NOLs may be carried back two years and forward 20 years. The NOL is first carried back to the earliest tax year for which it's allowable as a carryback or a carryover, and is then carried to the next earliest tax year. A taxpayer may elect to forego the entire carryback period for an NOL and instead carry it forward. The 2009 Assistance Act provides an election for most taxpayers (not just small businesses) to increase the carryback period for an applicable NOL to 3, 4, or 5 years from 2 years. An applicable NOL means the taxpayer's NOL for any tax year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010. This means the election may be made for a tax year beginning or ending in either 2008 or 2009. Taxpayers electing a 5-year carryback can use the NOL to offset up to 50% of the available taxable income for the 5th tax year preceding the loss year, and 100% of all taxable income in the remaining 4 carryback years. The amount of the NOL otherwise carried to tax years after the 5th preceding tax year is adjusted to take into account that the NOL could offset only 50% of the taxable income for the 5th year. In addition, the Act suspends the 90% limitation on the use of an NOL deduction for alternative minimum tax purposes, for alternative tax NOLs attributable to carrybacks for which the extended carryback is elected. We will work with our clients individually to determine whether they might benefit from this new provision.

Wednesday, November 18, 2009

National Association of Women in Construction (NAWIC)

Linda Martins (an Audit Manager here at TY) and I have become members of the National Association of Women in Construction (NAWIC). NAWIC offers a great support system for women who are in the construction industry. Through NAWIC, we have increased our knowledge of the industry by networking with other members employed in the construction industry. It has also enabled us to broaden valuable contacts for our firm and build lasting relationships. The NAWIC meetings are always educational and related to the construction industry. NAWIC Background: NAWIC is a professional Association comprised of women working in construction and related industries. It was established in 1955 by 16 founding members. Today, approximately 5,800 women in approximately 170 chapters across the United States are NAWIC members. Members of the Association are business owners/managers, executives, subcontractors, accountants and estimators. Members are also employed in construction trades, including welding, carpentry, plumbing and electrical work. You can visit the NAWIC website, www.nawic.org, for more detailed information. If you are interested in learning more about our personal experiences and how you can benefit from NAWIC please contact us and we will be happy to answer any questions you may have. Linda Martins - LMartins@ty-llp.com Lisa Silva - LSilva@ty-llp.com We would like to invite you to our next meeting so you can see for yourself how beneficial and supportive this group is for women. Our next meeting will be on Thursday, January 21, 2010 in San Ramon at 5:30pm. If you are interested in attending, or know someone who is, please let us know so we can provide you with more information.

Monday, November 16, 2009

California SDI amounts for 2010

California announced that the State Disability Insurance (SDI) rate for 2010 will remain the same as the prior year at 1.1%. However, the the taxable wage limit and corresponding maximum amount increase as follows:
20092010
Taxable wage limit $90,669.00 $93,316.00
Maximum SDI amount $997.36 $1,026.48
For January, please be sure to update your payroll programs to reflect the changes!

Thursday, November 12, 2009

Newly Extended & Expanded Homebuyer Credit

On November 6, the President signed into law H.R. 3548, the ''Worker, Homeownership, and Business Assistance Act of 2009.'' The new law extends and generally liberalizes the tax credit for first-time homebuyers. The following is a summary of these tax provisions. Homebuyer credit basics. Before the new law was enacted, the homebuyer credit was only available for qualifying first-time home purchases after April 8, 2008, and before December 1, 2009. The top credit for homes bought in 2009 is $8,000 ($4,000 for a married individual filing separately) or 10% of the residence's purchase price, whichever is less. Only the purchase of a main home located in the U.S. qualifies. Vacation homes and rental properties are not eligible. The homebuyer credit reduces one's tax liability on a dollar-for-dollar basis, and if the credit is more than the tax you owe, the difference is paid to you as a tax refund. For homes bought after Dec. 31, 2008, the homebuyer credit is recaptured (i.e., paid back to the IRS) if a person disposes of the home (or stops using it as a principal residence) within 36 months from the date of purchase. Before the new law, the first-time homebuyer credit phased out for individual taxpayers with modified adjusted gross income (AGI) between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. Revised homebuyer credit. The new law makes four important changes to the homebuyer credit: (1) Extension. The homebuyer credit is extended to apply to a principal residence bought before May 1, 2010. The homebuyer credit also applies to a principal residence bought before July 1, 2010 by a person who enters into a written binding contract before May 1, 2010, to close on the purchase of the principal residence before July 1, 2010. In general, a home is considered bought for credit purposes when the closing takes place. So the extra two-months (May and June of 2010) helps buyers who find a home they like but can't close on it before May 1, 2010. They can go to contract on the home before May 1, 2010, close on it before July 1, 2010, and get the homebuyer credit (if they otherwise qualify). Note that certain service members on qualified official extended duty service outside of the U.S. get an extra year to buy a qualifying home and get the credit; they also can avoid the recapture rules under certain circumstances. (2) Expansion of qualifying homes. The homebuyer credit may be claimed by existing homeowners who are “long-time residents.” For purchases after November 6, 2009, you can claim the homebuyer credit if you (and, if married, your spouse) maintained the same principal residence for any 5-consecutive year period during the 8-years ending on the date that you buy the subsequent principal residence. For example, if you and your spouse are empty nesters who have lived in your suburban home for the past ten years, you are potentially eligible for the credit if you “move down” and buy a smaller townhome. There's no requirement for your current home to be sold in order to qualify for a homebuyer credit on the replacement principal residence. Thus, the replacement residence can be bought to beat the new deadlines (explained above) before the old home is sold. For that matter, you can hold on to your prior principal residence in the hope of achieving a better selling price later on. The maximum allowable homebuyer credit for qualifying existing homeowners is $6,500 ($3,250 for a married individual filing separately), or 10% of the purchase price of the subsequent principal residence, whichever is less. (3) Expansion of eligible taxpayers. The homebuyer credit is available to higher income taxpayers. For purchases after November 6, 2009, the homebuyer credit phases out over much higher modified AGI levels, making the credit available to a much bigger pool of buyers. For individuals, the phaseout range is between $125,000 and $145,000, and for those filing a joint return, it's between $225,000 and $245,000. (4) Limit on home price. For purchases after Nov. 6, 2009, the homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000. It's important to note that there is no phaseout mechanism. A purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit. The new purchase price limitation applies whether you are buying a first-time principal residence or are a qualifying existing homeowner purchasing a replacement principal residence. Other homebuyer credit changes. The new law includes a number of new anti-abuse rules to prevent taxpayers from claiming the homebuyer credit even though they don't qualify for it. The most important of these are as follows:
  • Beginning with the 2010 tax return, the homebuyer credit can't be claimed unless the taxpayer attaches to the return a properly executed copy of the settlement statement used to complete the purchase of the qualifying residence.
  • For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed unless the taxpayer has attained 18 years of age as of the date of purchase (a married person is treated as meeting the age requirement if he or his spouse meets the age requirement).
  • For purchases after Nov. 6, 2009, the homebuyer credit can't be claimed by a taxpayer if he can be claimed as a dependent by another taxpayer for the tax year of purchase. It also can't be claimed for a home bought from a person related to the buyer or the spouse of the buyer, if married.
  • Beginning with 2009 returns, the new law makes it easier for the IRS to go after questionable homebuyer credit claims without initiating a full-scale audit.
Please feel free to contact us if you think you may benefit from the homebuyer credit.

Wednesday, November 11, 2009

Is Facebook Right For My Business?

Everyone seems to be jumping on the social media bandwagon, but if you are like me, you are wondering if it is the right thing to do for business and how. Experts in all industries are encouraging businesses to use social media to help create business or additional exposure for your business. One of my questions has been how to bridge the gap from personal use of social media to business use. I think most of us use Facebook for a primarily personal focus, but I found an article (excerpt below) that helps bridge the gap and provides some thoughts on using Facebook for your business. Hope you find this helpful. Is Facebook Really a Good Tool for Business? Ann Handley (MarketingProfs) Nov 10, 2009 - In a recent article on MarketingProfs, Paul Chaney identified what he sees as the “big three” social networks for business: Twitter, LinkedIn and Facebook. The first two I understand… but Facebook? It seems to me that lots of companies set up Fan Pages or Groups. They use them to collect friends like a squirrel hoarding nuts for winter. They even might post a few photos or press releases or blog posts. But then, the pages languish. So is Facebook really a good tool for business? Paul says, unequivocally: Yes. The author of The Digital Handshake: Seven Proven Strategies to Grow Your Business Using Social Media, Paul schools me and (I hope) you in how businesses can leverage a presence on Facebook. Click here to read the full article

Wednesday, November 4, 2009

California Governor announces 5 new stimulus projects

Governor Arnold Schwarzenegger’s California Recovery Task Force announced this month that $53 million in American Recovery and Reinvestment Act (Recovery Act) funding has been allocated by the California Transportation Commission (CTC) to five additional transportation projects in California, located in:
  • San Luis Obispo County
  • Santa Barbara County
  • Santa Clara County
  • Alpine County
  • Inland Empire
A comprehensive list of all projects that received allocations of this funding is available here.

Tuesday, November 3, 2009

Tax Credits Help Homeowners Winterize their Homes

The IRS reminds taxpayers of tax credits available for energy-saving improvements. The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit. (1) Nonbusiness Energy Property Credit: This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count. By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result. (2) Residential Energy Efficient Property Credit: Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property. Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits. Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return.

Monday, November 2, 2009

Free Webinar on Employee vs. Contractor Issues

The issue of classifying workers as employees or contractors continues to be of top concern to the IRS and FTB. Intuit is offering a free webinar on Nov. 4 about deciding when to hire an employee vs. a contractor, including a discussion of the necessary forms to file for each (W-2s, 1099s, etc.). If interested, you can click here for more information.