Monday, December 19, 2016

Rising Receivables Call for a Year End Review

Rising business receivables can be a sign of a growing, prosperous company – or of troubles ahead. How can you know if your receivables are right-sized for your business?
Start by breaking down the numbers. A report of your receivables listed by age will give you the information you need. Track the percentage of invoices paid late and compare the information to that of past years. Benchmark your statistics with those of your industry peers and look at the amount of unapplied or unreconciled customer payments.
Do you notice an issue with too many receivables? A receivables problem can be symptomatic of a defective accounting system. Are customer payments posted to the proper accounts accurately and timely? A delay in updating your records will make receivables collection less efficient. Are late notices sent to customers quickly and regularly? Is staff following up on outstanding bills? Perhaps your collections team needs training to beef up skills.
Your sales procedures can also cause problems. For example, extending credit to a borderline customer is a temptation that can result in painful losses. Create a consistent credit application process for your business. Make sure credit limits conform to company policies and that they are strictly enforced. Check bank and vendor references where appropriate.
What can you do before year end to address past due customer invoices? Here are three tips.
1. Double down on your collection efforts. Take advantage of the fact that your customers are likely flush with cash from seasonal sales.
2. Pay collection-related costs before year end. This ordinary business expense can give you an additional tax deduction this year.
3. If your business is on the accrual basis, consider writing off old invoices that you deem uncollectible. Bad debt expense can lower your taxable income.
Contact us for help in strengthening your receivables process and weeding out your problem accounts.

For more information, call us at (219) 769-3616 with your questions, or email them to

Thursday, December 8, 2016

Last Minute Tax Savers for Individuals

Even though the end of the year is fast approaching, you still have time to trim your 2016 federal income tax bill. Here are suggestions.

State and local income taxes. If you prepay certain state and local taxes, you can claim the deduction on your 2016 return. Caution: Analyze your exposure to the alternative minimum tax before accelerating these deductions.

Charitable donations. When you itemize, you can generally deduct the full amount of charitable donations you make by December 31, 2016, including those you put on your credit card and pay in 2017.

Capital gains. Consider selling appreciated investments if the gain on the sale will be absorbed by prior losses or if you will benefit from the preferential long-term capital gain tax rate available when you own assets for more than a year.

Capital losses. By “harvesting” capital losses from depreciated securities at year-end, you can offset other capital gains plus up to $3,000 of ordinary income.

Required minimum distributions. Verify that you have withdrawn the right amount from your qualified plans and IRAs to avoid a 50% tax penalty.

Dependency exemptions. Review how much support you provided to dependents in 2016. Generally, you can claim a dependency exemption for a qualifying relative if you provide more than half of the financial support for the year.

Medical expenses. When you itemize, you can claim deductions for unreimbursed medical expenses that exceed 10% of your adjusted gross income. Move elective medical and dental procedures, such as routine exams, into 2016 if those expenses will help you clear the 10% threshold.

Indiana Taxpayers.  Review Indiana’s Section 529 college savings plan for tax credits up to $1,000 per year.

Estimated taxes. Avoid an underpayment penalty by paying at least 90% of your 2016 tax liability or 100% of last year’s liability (110% if your adjusted gross income exceeded $150,000).

Please call us to discuss planning ideas for your specific tax situation.

For more information, call us at (219) 769-3616 with your questions, or email them to


Friday, December 2, 2016

OASDI Wage Base for 2017

As the end of the year approaches, it’s time to turn our attention to planning for 2017.  This includes ensuring that proper payroll tax rates and wage bases are updated in payroll systems as of January 1.  For 2017, the Old Age, Survivors and Disability Insurance (OASDI) taxable wage base increases to $127,200, an increase from the base of $118,500 in 2016.  The OASDI tax rate for both employees and the employer match remains at 6.2%. 
The Medicare portion of the FICA tax continues to have no limit or cap on its taxable wage base.  The base Medicare rate for both employees and the employer match remains at 1.45% of wages.  Employees earning more than $200,000, however, must pay an additional 0.9%.  This additional tax is withheld and remitted by their employer, but not matched by the employer.  

For guidance with your payroll tax planning, contact our office.  Call us at (219) 769-3616 with your questions, or email them to

Wednesday, November 23, 2016

Questions to Ask Before Signing a Business Loan

Are you thinking of taking out a loan to buy new machinery or additional inventory for your business? Before you sign that loan document or credit application, consider the following questions.

What's the true cost of borrowing? The interest rate on your business loan may be variable, fluctuating over the life of your loan. Calculate the impact of potentially higher future payments on your ability to pay other debt, such as amounts you owe your vendors. Include fees in your assessment. Your lender may ask for loan origination fees, application fees, administrative fees, and fees for gathering financial information about your company. Consider intangible costs too, including how long you have to wait before the loan is finalized and what opportunities you're missing while waiting.

How will the loan be secured? Your lender will most likely require you to provide collateral, meaning you'll be asked to pledge assets as security to ensure loan repayment. If you're unable to pay the loan back, you run the risk of losing those assets. In some cases, you can use your business inventory or accounts receivable as collateral. Keep in mind those assets will be unavailable for other business borrowing. Alternatively, depending on the size of your business, you may have to use personal assets, such as your house or cash savings, as security. Make sure you have assessed the risk of loss before finalizing the loan.

Can you wait to make the purchase? Saving for purchases may be old- fashioned, but you'll be investing in your business, with no lender to repay and no interest expense or other fees. In addition, you retain control of all your assets. Here again, opportunity cost will play a role in your decision, as you may miss out on taking advantage of good deals or possibilities for business growth.

When you're ready to evaluate your financing options, give us a call. We can help you make the right choice.


Call us at (219) 769-3616 with your questions, or email them to

Tuesday, November 8, 2016

Data Security is an Essential Part of Customer Care

Security breaches of confidential data capture the global news headlines on a daily basis. Identity theft has become so commonplace that credit card companies and banks market their protection efforts as free services to their customers. The IRS is at risk too, with impersonators using the fear and authority of the government to prey on victims. It's a scary world out there with the amount of personal data available to criminals looking to take advantage. The world might be scary closer to home too. Have you considered how much personal customer data your business handles? Are you confident in the security measures you have in place?

If you're just beginning a data security review of your company, start by understanding how you may be unintentionally exposing customer data. Then protect yourself by implementing security procedures. Here are questions to consider.

  • Where do you access company email? At the airport, on your phone, or via the free internet at the local cafĂ©? Make sure your phone and your internet connection are both secure.
  • Have you taken a work file home with you? Was the file a printed hardcopy, on a USB drive, or did you send it to a personal email account? Don't make data theft easy for the bad guys.
  • Do you upload data to a free cloud storage account? Know your vendors and their security procedures.
  • Are all of your passwords unique or do you duplicate the same password on multiple accounts? Use a password locker.
  • Do you secure your hardcopy data? Printouts can also be a vulnerable access point for identity theft. Best practices include strong procedures for document destruction, retention, and physical security.
    No matter the type of business you operate, acting wisely to protect sensitive data is an essential part of customer care. Don't let your company become the next headline.

Friday, October 21, 2016

Close is Not Good Enough With New Reporting Rules

The old adage "close only counts in horseshoes" is an accurate reflection of the new IRS information reporting rules. Beginning with 2016 returns, due dates for Forms W-2 and certain Forms 1099 have been moved up, and the penalties for late or inaccurate forms have substantially increased.

Here are the new filing deadlines for 2016 returns.

  • Form W-2 is due to the Social Security Administration on January 31, 2017, instead of February 28, whether you file electronically or by paper. (If you file 250 or more forms, you must file electronically.)

  • Form 1099 must be submitted by January 31 if you're reporting non-employee compensation in Box 7. Otherwise, the forms are due to the IRS on February 28, the same as in prior years, or March 31 if you file electronically.
    In addition to making sure you file on time, you also need to make sure the forms are accurate. Penalties can be assessed for missing or wrong social security numbers, incorrect amounts, filing on paper when electronic forms are required, and failure to provide a copy of the return to the payee.
    How much are the penalties? If you fail to file by the required due date and your business has gross receipts of more than $5 million, penalties can range from $50 per return for being as much as 30 days late, to $260 per return for filing after August 1. The maximum dollar penalty can range from $532,000 to $3,193,000. If the IRS says you intentionally disregarded the rules, you can be fined $530 per return, with no maximum.
    When your receipts are $5 million or less, the same per-return fines apply, but maximum penalties range from $186,000 to $1,064,000.
    Information reporting requirements are no game. Contact our office for assistance.
    Call us at (219) 769-3616 with your questions, or email them to

FDIC and SIPC: Important Allies in Uncertain Times

Worried about the next financial crisis? Reacquaint yourself with two important allies: the Federal Deposit Insurance Corporation (FDIC) and the Securities Investor Protection Corporation (SIPC).

The FDIC. The FDIC is an independent agency of the U.S. government and provides up to $250,000 in protection for qualified bank accounts in case of a bank failure. The insurance applies to each unique account owner, regardless of the number of accounts held at the failed bank.

Knowing how ownership is defined can be tricky. For example, every individual who is a co-owner of a joint account receives $250,000 of coverage as long as each has equal withdrawal rights and has signed the bank card. Each uniquely designated beneficiary of a revocable trust receives $250,000 in coverage when certain requirements are met. But coverage for irrevocable trusts is generally limited to $250,000. All accounts owned by a corporation or partnership at the same bank are generally limited to $250,000 of coverage.

The SIPC. The SIPC is a nonprofit membership corporation that is overseen by the U.S. Securities and Exchange Commission. The SIPC helps preserve investment accounts when a participating brokerage firm goes out of business and assets are missing. In that situation, the SIPC will work to restore the cash and securities held in your account at the time of closure, with protection of up $500,000. That includes up to $250,000 for cash.

The SIPC does not safeguard you from market losses or worthless stocks, nor protect you from bad investment advice. In addition, certain types of investments, such as commodities futures contracts, generally do not qualify for coverage.

Protection is determined by the way you hold accounts. For example, if you have a regular taxable brokerage account and an IRA with the same firm, each account is generally eligible for separate coverage.

Keep in mind that your financial institution must be an FDIC or SIPC member to qualify. For more information about determining your level of protection, contact our office.

Call us at (219) 769-3616 with your questions, or email them to