4Thought Blog

Most organizations hire a CPA to issue financial statements that conform to U.S. Generally Accepted Accounting Principles (GAAP).

But not all financial statements are created equal. Owners can choose from three basic options, in order of decreasing assurance level: audits, reviews and compilations.

What's appropriate depends on the size of your organization, management's needs, regulatory requirements and stakeholder demands. During these turbulent times, it might be time for a company to upgrade (or downgrade) its level of assurance.

With year end fast approaching, it's time to consider tax planning moves that may lower taxes for the 2022 tax year — and possibly set you up for tax savings in future years as well. 

The good news is that it now appears that there won't be any significant unfavorable federal tax changes that will take effect this year or next year. Assuming that's an accurate prediction, the tax planning environment this year end is better than it has been in past years, when Congress was considering unfavorable federal tax change proposals.

Fortunately, those changes didn't happen, leaving you with some familiar tax planning strategies to consider.

Is your manufacturing company on the cutting edge? It's important to keep pace with the competition, especially if you're trying to carve out a niche in a new marketplace.

Fortunately, federal tax law allows manufacturers to claim a generous tax credit for qualified research expenses. The credit generally offsets income tax liability on a dollar-for-dollar basis.

Now there's some extra tax incentive: The Inflation Reduction Act (IRA) expands the ability of qualified small businesses to use research credits to offset federal payroll tax instead of income tax.

Your nonprofit organization is probably assisted by volunteers who aren't financially compensated. But your staff — including executives — are almost certainly paid a commensurate salary and benefits for their work.

Compensation issues are always tricky, but they're made more so by tax and legal requirements for nonprofits. Setting executive pay is particularly fraught because if your nonprofit isn't careful, it could be penalized or even lose its tax-exempt status.

Construction business owners know that cash is king. However, managing cash flow in an industry known for its ebbs and flows isn't easy.

And when you throw in the steady rise of inflation and ongoing supply chain issues, cash-flow management has become more important than ever.

Here are nine tips to consider:

When the owners of a family business are ready to sell, there are many considerations. Among the most important is handling the sale in a tax-wise manner.

In most cases, the buyer wants to make a direct purchase of the company's assets — as opposed to buying all the ownership interests in the legal entity used to conduct the business. A direct asset purchase allows the buyer to "step up" the tax basis of the acquired assets to reflect the purchase price. That means bigger post-purchase tax write-offs for depreciation, amortization, cost of goods sold and so forth.

A specific set of federal income tax rules applies to these transactions. Sellers who plan ahead can minimize their tax bills. Those who don't often pay too much to Uncle Sam and their state tax collectors.

You've probably spent considerable time thinking about your estate plan and what objectives it should achieve.

Unfortunately, after you're gone, unanticipated events can thwart your best laid plans. But a "power of appointment" can provide your estate plan with flexibility and adaptability.

This is an estate plan provision that gives a designated beneficiary some control over some or all of your trust's property. Assuming this person fulfills the duties properly, he or she will have the discretion to change distributions from the trust or even add or subtract beneficiaries. Let's take a look.

There's more to financial reporting than profits. The statement of cash flows can be a powerful management tool.

During an economic downturn, it's especially important for managers to monitor cash flows to detect — and correct — problems as soon as possible.

Here's an overview of how this underappreciated report works and what to look for as you review it.

If your nonprofit focuses most of its fundraising energy on donors who can contribute to your mission and programs now, you may have neglected legacy gifts.

Such gifts represent a portion of wealthy donors' estates that go to your organization on their death. Legacy gifts can help position your nonprofit for sustained growth well into the future.

Let's take a closer look at the hows and the whys.

Two things in life are certain: death and taxes. While you can't live forever, there are still some ways to collect tax-free income.

Here's a list of common federal-income-tax-free opportunities for individuals.