 HARDING, SHYMANSKI & COMPANY Certified Public Accountants and Consultants
Our Goal: Your Success! February/ March 2013
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| Manufacturing and Wholesale Distributors | |
Is today's business environment presenting unique opportunities and issues for your manufacturing operation? How are you addressing the push from your customers for continuous quality improvement? Are you having difficulty finding and retaining quality employees? Add to these issues declining profit margins and strained resources due to rapid growth and you have major challenges facing you day in and day out.
At Harding, Shymanski & Company, P.S.C. we have a dedicated team ready to assist you with those unique challenges and issues facing your industry.
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| Quick Links | |
 Doug Bawel, President & CEO
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STEP Grant to Support Kentucky Export Growth
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Recently, Kentucky was awarded funding by the U.S. Small Business Administration for grants to assist eligible small businesses with developing markets overseas. Given the strong worldwide demand for U.S. products and services, export growth for small and mid-sized companies is a priority in the national economic recovery strategy.
Exporters can utilize the grants to locate qualified buyers, attend trade events, conduct market research, and more. The grants are available to new and experienced exporters. The basic eligibility requirements include having fewer than 500 employees, being profitable in the past year, a product/service with export potential, and domestic sales history.
Grants are available on a competitive basis to companies who meet the small business standards as set by the U.S. Small Business Administration and can self-certify their eligibility. A complete listing of industry specific small business definitions is available here. For more information, or to apply for the STEP Grant, please visit www.kyexports.com.
For additional information, please contact Scott Olinger, CPA, CPIM, at (800) 880-7800 or solinger@hsccpa.com.
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Congress Passes the American Taxpayer Relief Act of 2012 to Avoid the Fiscal Cliff
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The American Taxpayer Relief Act (ATRA) was passed on January 1, 2013. There are numerous tax law changes affecting businesses and individuals. Below is a summary of the key changes:
Individual Income Tax Impact
- For single taxpayers whose income exceeds $400,000 and married taxpayers whose income exceeds $450,000, a marginal tax rate of 39.6% will apply, as well as a 20% maximum rate for capital gains.
- Bush-era tax rates are still in place for taxpayers earning less than the levels listed above.
- All wage earners, despite income level, will see an increase in taxes due to the 2% payroll tax holiday not being extended into 2013.
- The Pease Limitation, which reduces itemized deductions by 3% of the amount by which the taxpayer's adjusted gross income exceeds $300,000 for married couples and $250,000 for single taxpayers has been reinstated.
- Personal exemption phase-outs were also revived with the passage of ATRA, at the same income thresholds as the Pease Limitation. Under this phase-out, the total amount of exemptions that may be claimed by a taxpayer is reduced by 2% for each $2,500 by which the taxpayer's adjusted gross income exceeds the applicable threshold level.
- Alternative Minimum Tax (AMT) was permanently patched and indexed for inflation.
- The unified estate and gift exclusion is now $5 million, adjusted annually for inflation.
Business Incentives Extended through 2013
- Section 179 expensing with a purchase limitation of $500,000 and a $2 million investment limit.
- 50% bonus depreciation on qualifying new property.
- Research tax credit.
- The Work Opportunity Credit, which rewards employers who hire individuals from targeted groups.
- 100% exclusion for gain on sale of qualified business stock.
- Reduced recognition period for S corporation built-in gains tax.
For additional information, please contact John Rittichier, CPA, at (800) 880-7800 or jrittichier@hsccpa.com.
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Work Opportunity Credit (WOTC) Extended By American Taxpayer Relief Act (ATRA)
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The American Taxpayer Relief Act extends the WOTC through 2013. Under the revived WOTC, employers hiring an individual within a targeted group (generally, otherwise hard-to-employ workers) are eligible for a credit generally equal to 40% of first-year wages up to $6,000. The Vow to Hire Heroes Act of 2011 (Heroes Act) extended the WOTC for unemployed veterans and unemployed veterans with service connected disabilities through 2012. The WOTC for qualified veterans can be as high as $9,600. The Heroes Act did not extend the non-veteran WOTC provisions. The American Taxpayer Relief Act extends the WOTC for qualified veterans as well as for those within prior targeted groups.
In November 2011, the Three Percent Withholding Repeal and Job Creation Act was signed into law. A major provision of the new law included the expansion of tax incentives to encourage employers to hire military veterans. The Work Opportunity Tax Credit (WOTC) rewards employers with a tax credit for hiring individuals from targeted groups. The new law expanded the WOTC by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit.
For additional information, please contact John Rittichier, CPA, at (800) 880-7800 or
jrittichier@hsccpa.com.
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How Manufacturers Can Spot and Mitigate Fraud
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While fraud can happen in any type of business environment, manufacturing companies have some distinct vulnerability. According to the Association of Certified Fraud Examiners (ACFE) reports, the median loss due to fraud for manufacturing companies is approximately $200,000. Owners and executives of manufacturing companies need to develop a broader awareness about fraudulent activities to reduce their risk of becoming a part of the statistics.
A quick first step to address these risks is to consider how your business can minimize opportunity. If the business does not have a defined fraud control system, now is a good time to convene senior leaders, key employees and (if available) a board audit committee representative for a comprehensive risk assessment. When the most critical fraud opportunity risks are identified, select control activities that address those specific needs. Remember, fraud prevention is a dynamic process. By starting the risk assessment process - then moving to implement the most important missing control - you can help your company dramatically reduce the risk of fraud.
If your company has an internal control system, consider testing it for possible holes. In addition to an external audit of controls and financial reporting, if you suspect or become aware of potential fraudulent activity, consider launching an internal investigation or hiring an outside firm to handle the task.
Be alert to employees in key roles who exhibit unusual or stress-related behavior, or those who may be experiencing personal or financial difficulties. In addition, watch for workers who demonstrate recent material purchases seemingly beyond their means (new home, car, expensive personal items). These may be clues pointing to fraudulent activity.
The above are just a few steps that can be taken by owners and executives of manufacturing companies to control their risk of taking losses due to fraudulent activity.
For additional information click here, or contact Kyle Wininger, CPA, CICA, CVA, at (800) 880-7800 or kwininger@hsccpa.com.
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Financial Reporting Framework for Small and Medium Sized Entities
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In November of 2012, the AICPA released an exposure draft of a financial reporting framework for small to medium sized, owner-managed companies, or SME's. The new framework is designed to be less complicated and less costly than current US GAAP, and involves a blend of traditional methods of accounting with some income tax based methods.
The benefit of the new reporting framework will be a less complicated and less costly system for accounting. It is intended to be a stable framework that will not undergo frequent changes. It is important to note that the financial reporting framework for SME's is not inferior or superior to traditional GAAP; the issue is what is most suitable for these entities.
Historical cost will be used as its measurement basis, departing from the increased use of fair value under traditional GAAP. Accounting for derivatives, hedging activities, and stock compensation are some examples of the complicated items that will no longer be required. Disclosure requirements will be greatly reduced, while still providing the financial statement users with needed relevant information.
Comments and suggestions are now being taken to gather information on what can be done to implement the new framework. The AICPA is expected to issue the final framework in the first half of 2013.
For additional information, please contact Scott Olinger, CPA, CPIM, at (800) 880-7800 or solinger@hsccpa.com.
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World Trade Center Kentucky Offers Export Training
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The World Trade Center Kentucky is offering a 3-hour program that covers the major facets of exporting. Export 101 covers many topics related to exports, including overseas market research, foreign standards and regulations, free trade agreements, and many others. The following sessions are available:
- Export 101 (public) - The Export 101 public session will be held on February 25. This seminar is geared towards companies new to exporting. For more information on this session, click here. This seminar is being hosted in conjunction with SBA, EX-IM Bank, US Commercial Service, District Export Council and the umbrella organization Kentucky Export Initiative (KEI).
- Export 101 (onsite) - The World Trade Center also conducts Export 101 sessions on site. The session includes a couple of hours for follow up questions, and usually evolves into a needs analysis for the participating team. It sparks questions internally and in some ways acts as a barometer of the teams' current compliance level.
- NAFTA and other Free Trade Agreements - World Trade Center also will have a session on NAFTA on March 14. The seminar is being held at Crowe-Horwath in Louisville, Kentucky. Intro sessions are also available for any company specifically interested in this topic. The Export 101 session covers some aspects of NAFTA as well.
Additionally, the World Trade Center Kentucky can assist with KY STEP Grant applications. See the above article for more information on STEP Grants.
For additional information, please contact John Rittichier, CPA, at (800) 880-7800 or jrittichier@hsccpa.com.
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Harding, Shymanski & Company, P.S.C. provides accounting, tax, and consulting services to clients from offices in Evansville, Indiana, and Louisville, Kentucky.
Call us today! (800) 880-7800
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| Disclaimer |
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax or accounting advice.
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