4Thought Blog

Your neighborhood ice cream shoppe no doubt operates under a simple fixed price, point-of-sale billing method. Construction companies don't have it so easy.

Because of the project-based, decentralized nature of construction work, contractors need to use various billing methods. Let's review the five most common in case you might be overlooking an approach that could better suit your business needs.

There are several tax policies geared at deducting major equipment purchases – such as Section 179 and Bonus Depreciation – but there’s another IRS rule McDonald’s Owners should know that applies to smaller expenditures for the acquisition or improvement of tangible property.

The IRS Repair Regulations are a way for McDonald’s Owners to deduct the costs of smaller purchases – such as muffin toasters, sweetener dispensers, etc., in the year acquired without impacting any accelerated depreciation limitation. But you need a specific accounting policy in place to take advantage of this benefit.

While repair regulation rules have flown under the radar since 100% bonus depreciation was passed as part of the Tax Cuts and Jobs Act at the end of 2017, it may be a useful tax planning tool again soon with bonus depreciation scheduled to begin phasing down each year starting in January 2023 and all the way to 0% by January 2027.

Congress has passed the Inflation Reduction Act (IRA) and President Biden is expected to sign it into law.

The $740 billion bill contains many tax breaks and raises revenue through a new minimum tax on large, profitable corporations and an excise tax on stock buybacks. It's intended to reduce the U.S. deficit by about $300 billion. Other revenue would come from stricter enforcement of tax compliance by the IRS.

Here are some highlights of the bill.

Does your manufacturing company need to acquire new equipment to meet demand? Fortunately, there's a tax break that can help: the Section 179 deduction.

 It allows you to deduct this year the cost of qualifying new or used property you purchase. Your deduction can even exceed the amount you provided from your own funds to make the purchase.

However, there are two limits on Sec. 179 deductions that might stand in your way. So it's important to understand all the relevant rules.

The 2022 tax year is well underway, and year end will be here before you know it.

Summer is a good time to take proactive steps to help reduce the current year's tax bill.

Here are some federal tax-planning strategies to consider.

Nonprofit organizations have been navigating change in almost every aspect of their operations over the past two years, including shifting priorities, a new employment landscape, and changes in fundraising and hosting programs and events.

As organizations continue to reimagine what their futures will look like, donor engagement strategies should be reevaluated and refined to ensure they keep up with these other changes.

Consider the following steps to support strong donor engagement:

The balance sheet — which shows a company's assets and liabilities — is a logical starting point for valuing certain types of businesses.

The cost (or asset) approach specifically focuses on this part of a company's financial statements. Here's an overview to help you understand this valuation technique.

Companies routinely evaluate opportunities to reduce expenses. With the prices of gasoline, diesel fuel, natural gas and propane surging across the country, many organizations are currently focusing on lowering energy consumption. This process starts with an energy audit.

Not only are many of the savings from an energy audit sustainable, "going green" can also add value by demonstrating responsible business practices and engendering support from environmentally conscientious employees, customers and other stakeholders. Even better, your company may qualify for tax breaks for making energy-saving changes.

An effective energy audit begins with a data gathering exercise. Consider the following nine steps:

Scam artists are impersonating the Department of Revenue by sending Pennsylvania business owners fraudulent letters in the mail that direct them to turn over their accounting records.

The goal of this ploy is to trick unsuspecting taxpayers into providing sensitive financial information, which the criminals behind the scheme can use for a number of illicit activities that could seriously harm a business' financial standing.  

"We are urging Pennsylvania business owners to be on high alert if they receive a suspicious notice that includes the Department of Revenue name and logo,” Revenue Secretary Dan Hassell said in a recent news release.

While many businesses handle sales in a single transaction, construction contracts often cover months or even years and include multiple payments.

As you're well aware, the longer-term nature of construction projects can prevent contractors from billing and collecting on a timely basis, which can lead to accounting, tax and cash flow complications.

From an accounting perspective, the term "revenue recognition" refers to precisely how you determine when you've received payment and when you can record the revenue. Let's review the three most commonly used types of revenue recognition in the construction industry.