The Tax Cuts and Jobs Act (TCJA) has enhanced two depreciation-related provisions of the Internal Revenue Code that are popular year-end tax planning tools for businesses. To take advantage of these provisions, you must purchase qualifying assets and place them in service by the end of the tax year. That means there's still time to reduce your 2018 tax liability with them, but you need to act soon.
Audit opinions differ depending on the information available, financial viability, errors discovered during audit procedures and other limiting factors. The type of opinion your auditor issues tells stakeholders whether you're in compliance with accounting principles and likely to continue operating as a going concern.
Small businesses often use an overall method of accounting identified as the cash-basis due to its simplicity. As businesses grow, they usually convert to the overall method described as accrual-basis for federal tax reporting purposes which also conforms with U.S. Generally Accepted Accounting Principles (GAAP) requirements for financial reporting.
Starting this tax year, the Tax Cuts and Jobs Act (TCJA) increased the annual gross revenue threshold which limits the use of the cash-basis for tax reporting; if a business generates less than the threshold, it is allowed to use the simpler cash-basis for federal tax reporting purposes. Here's how these accounting methods compare and how the TCJA could affect your financial and tax reporting decisions.
The Tax Cuts and Jobs Act (TCJA) contains a provision that generally ties revenue recognition for book purposes to income reporting for tax purposes, for tax years starting after 2017. This narrow section of the law could have a major impact on certain industries, especially as companies implement the updated revenue recognition standard under U.S. Generally Accepted Accounting Principles (GAAP).
By Jack Schmoll, CPA
Sales tax collection responsibilities for businesses are changing dramatically. The days of businesses ignoring tax collection on out of state sales are coming to a close due to the Supreme Court of the United States (SCOTUS) ruling in South Dakota v. Wayfair. This will not only affect online businesses, but any business selling into states where they are not currently collecting sales tax.