HTW Post-Season News & Upcoming Small Business Webcasts

News Update Huddleston Tax CPAs Webcast

Huddleston Tax Weekly News

Now that we’re past our busiest part of the year, HTW is happy to announce that we’ll be continuing our previous trend of bringing topical, high-quality material to our readers on a regular basis. HTW would like to continue examining the contours of the sixteenth amendment for a bit longer; the reason for this is because we believe firmly that an understanding of this exceedingly important political act is vital to gaining a full picture of our whole tax edifice. But after we explore the amendment in a bit more detail, we’re excited to say that we’ll be moving on to other issues which should be equally interesting to our audience. We will explore more real estate cases, current tax cases, international issues, and plenty of other exciting things.

Small Business Webcast

We’d also like to draw our readers’ attention to two upcoming webcasts which will be hosted from our site, smallbusinesswebcast.com. The first webcast — The Tax Benefits of Real Estate Ownership — will be given by our CPA, Jessica Chisholm. Jessica has given this presentation previously and is well familiar with this specialized area. The second webcast — Tax Reduction Strategies for Small Law Firms — will be presented by our CPA, Steven Lok. Assisting small law firms is one of Steven’s specializations.

As always, these presentations are entirely free to attend. We hope you enjoy these webcasts and the many more entertaining articles HTW has in store!

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Tax Reduction Strategies for Small Law Firms by Steven Lok, CPA

Small Law Firms Tax Reduction Strategies

Small Law Firms

Huddleston Tax CPAs takes a particular interest in helping small businesses with their tax and accounting needs. Consistent with this interest is our focus on the tax strategies which may assist small law firms. Our CPA, Steven Lok, will be giving a presentation on December 7, 2016 which will discuss these tax strategies.

Among the topics covered by Mr. Lok will be entity selection, client trust funds, accounting methods, deductions and others as well.

The webcast is entirely free to view. Individuals who’d like to attend can sign up (for free) at www.smallbusinesswebcast.com.

The presentation will commence at 10:00 am PST and end no later than 11:00 am PST.

Image credit: jennymcbill

Video introduction to our upcoming webcast

The Basics of Starting Your Own Business

Starting Business Entrepreneur

Businessman

Starting a new business is an exciting, life-altering endeavor. Historically, it has been America’s entrepreneurial spirit which has pushed us along from the days of the general store up to the bustling multistate corporation. Whether self-taught or equipped with an MBA, all aspiring entrepreneurs have to be aware of a number of essential points when setting up a brand new business. In this article we will discuss in detail several of these points.

One of the first – and most important – things an aspiring entrepreneur must consider is business structure. That is, future businesspeople must decide which business entity is most appropriate for them. Aspiring business owners can choose between the following options: sole proprietorship, LLC, partnership, C Corporation and S Corporation. Depending on the details of a person’s circumstances, each of these options has the potential to be optimal. The sole proprietorship is the easiest entity to set up; however, one drawback of the sole proprietorship is that profits are subjected to the employment tax of 15.3 percent. Before selecting an entity, be sure that you consider every relevant aspect of your situation and then make the decision accordingly.

Another important item for businesspeople is name selection. When creating a new business, the future business owner cannot simply choose any name which suits his or her fancy; the businessperson must select a name which has not already been registered with the state. Whatever name a person decides on, the name must be unique. For this reason, before settling on a particular name, it is important to search your state’s website in order to see whether a given name has already been chosen. Business owners will also need a license before they can begin any commercial activity. Licensing requirements vary state to state and so it is incumbent upon aspiring entrepreneurs to determine the specific requirements which apply in their state.

In the majority of cases, future business owners also need to procure an Employer Identification Number (EIN). EINs are required for corporations, partnerships and all businesses which have employees. Sole proprietorships and single-member LLCs with zero employees are not required to obtain an EIN. The simplest way to obtain an EIN is to apply online on the website of the IRS; applying online will allow businesspeople to receive their EIN immediately. Business owners can also print out a paper application and then mail the form (known as SS4) directly to the IRS.

These are just several of the essential steps an aspiring businessperson must take in order to establish a new business. In addition to these steps, future entrepreneurs will also need to consider a few other things; they will need to determine what accounting method they will use, whether their business is considered a business or a hobby by the IRS, how to add employees, business taxes and so forth. If you’d like to pursue these issues in greater depth, check out the presentation given by our CPA Jessica Chisholm.

Image credit: T KONI

To learn more view the following video from Small Business Webcast

This Summer’s CPE Webinars, Small Business Webcast and the IRS’s Tumblr!

We hope you enjoyed your weekend and you’re looking forward to a great work week despite all the great weather! For your downtime, we present this week’s blog post! It’s chock full of great links and news to keep you up to date on all kinds of stuff! Exhibit A: Did you know the IRS has a tumblr? Who knew?

Sometimes, it’s good to cover a lot of ground especially since there’s so much going on in the world right now–The World Cup begins next week in Brazil, Russia is in Ukraine indefinitely, and tax professionals will be attending CPE webinars! As far as that last bit goes, remember it’s also important to stay grounded.

But seriously, if you’re a tax professional, take a look at the  CPE webinars presented by Thomson Reuters and Bisk CPEasy this summer. “Key Issues in Accounting & Auditing: What CPAs Need to Know” will be presented on June 23, July 28, and August 25 and “Summer Sizzler! Hot Mid-Year Tax Topics for 2014” will be presented June 24, June 30, July 15, and August 12. The courses provide 8 hours of continued education credit and will be presented live, offering you the chance to interact with the presenters. If you’re interested in learning more about these events, follow this link to the CPA Practice Advisor article or click the links in the dates listed to register.

If you’re not a tax professional or even if you are, we’d like to take this opportunity to remind you about Small Business Webcast and all of the great webinars we produce for our members on the site. Our events cover dozens of professional tax and accounting topics and are presented by our expert staff of CPAs. (None of our CPAs has less than 10 years of tax and accounting experience.) Small Business Webcast is also a community where small business owners and professionals  network in their area and worldwide while attending events both live and online to educate themselves. There are over 2,000 members watching webcasts and attending our events at Small Business Webcast. It really is a great resource for anyone looking to grow their business and their business acumen.

Be sure to visit us and register at http://www.smallbusinesswebcast.com/

Well, that’s what we’ve got this week! We hope you were entertained, informed and join us for upcoming events at Small Business Webcast!

 

Resource for Business Valuations

The valuation of a business, business ownership interests or intangible assets may be performed for a wide variety of purposes including:

1) Transactions such as acquisitions, mergers, buyouts, employee stock ownership plans, partner or shareholder buy-ins or buyouts, and stock redemptions.

2) Litigation relating to matters such as marital dissolution, bankruptcy, contractual disputes, owner disputes, dissenting shareholder cases, employment disputes, and intellectual property disputes.

3) Tax compliance such as corporate reorganizations, S corporation conversions, estate and gift tax, purchase price allocations, and charitable contributions.

4) Tax planning for income estate and gift tax, and personal financial planning.

The Assumptions and Limiting Conditions Included in the Report Define the Business Valuation

The business valuation report will include a number of assumptions and limiting conditions under which the valuation was prepared. These assumptions and limiting conditions define the business valuation.

Conclusion of Value Limited to the Stated Purpose

1) The conclusion of value is valid only for the stated purpose as of the date of the valuation.

2) Stated purpose is very specific:

  1. A particular transaction:
    1. Acquisitions and mergers.
    2. Buyouts.
    3. Buy-ins.
  2. Litigation:
    1. Marital dissolution.
    2. Bankruptcy.
    3. Contractual disputes.
  3. Tax compliance:
    1. S corporation conversions.
    2. Estate and gift tax returns.
    3. Purchase price allocations
    4. Charitable contributions.
  4. Tax planning:
    1. Income tax.
    2. Estate and gift tax.
  5. Personal financial planning.

Reliance on Financial Statements and Other Information

1) Financial statements and other related information are provided by the business or its representatives to the firm performing the valuation.

2) These financial statements and other related information are accepted without any verification as fully and correctly reflecting the subject company’s business conditions and operating results.

3) The firm performing the valuation will not have audited, reviewed, or compiled the financial information provided to them.

Public Information and Industry and Statistical Information

1) The firm performing the valuation obtains public information and industry and statistical information from sources that it believes to be reliable.

2) No representations as to the completeness or accuracy of the public information and industry and statistical information are made by the firm performing the valuation.

3) No procedures have been performed by the firm performing the valuation to corroborate the public information and industry and statistical information.

Achievability of Forecasted Results

1) Forecasts are frequently used in the calculation of value.

2) A forecast is a prediction or estimate of some future event or trend.

3) The firm performing the valuation provides no assurance as to the achievability of any forecasted results.

4) Events and circumstances frequently do not occur as expected and differences between actual and expected results may be significant.

5) Achievement of forecasted results depends on the actions, plans, and assumptions of management.

Management Expertise and Effectiveness

1) The conclusion of value is based on the assumption that the current level of management expertise and effectiveness would continue to be maintained.

2) The conclusion of value also assumes that the character and integrity of the subject business would not be significantly changed by any sale, reorganization, or exchange of the business, or by the diminution of the owners’ participation.

Use of the Valuation Report

1) The valuation report and conclusion of value are for the exclusive use of the subject business or its representatives for the sole and specific purposes as noted in the report.

2) The valuation report is not authorized to be used for any other purpose other than as noted in the report.

3) The valuation report is not authorized to not be used by any other party, other than the subject business or its representatives, for any purpose.

4) The report and conclusion of value are not intended to be investment advice in any manner. The conclusion of value represents the considered opinion for the firm performing the valuation, based on information provided by the subject company and other sources.

Dissemination to the Public

1) No part of the valuation report it intended to be disseminated to the public by any means of communication. Any exception to this limitation would require the prior written consent and approval of the firm performing the valuation.

2) Dissemination to the public would include such communications as advertising media, public relations, news media, sales media, mail, and direct transmittal.

Testimony or Attendance in Court

1) Future services with respect to the subject matter of the valuation report, such as providing testimony or attendance in court, are not required of the firm performing the valuation.

2) Additional services from the firm performing the valuation, such as providing testimony or attendance in court, would be available upon request and by separate arrangement.

Environmental Issues

1) The firm performing the valuation is not an environmental consultant or auditor, and bears no responsibility for any actual or potential environmental liabilities.

2) Those persons who need to know whether any actual or potential environmental liabilities exist, or the scope and effect of such liabilities on the value of the subject company, should obtain a professional environmental assessment.

Reliance on Environmental Reports

1) In the case of reports provided by the subject company, or by an environmental consultant working for the subject company, of any present or future liability relating to environmental matters, for inclusion in the valuation report and conclusion of value, the firm performing the valuation may rely on those environmental reports without verification.

2) The firm performing the valuation offers no warranty or representation as to the accuracy or completeness of any such environmental reports.

Americans With Disabilities Act

1) The firm performing the valuation does not provide a compliance survey or analysis to determine compliance with the Americans with Disabilities Act of 1990.

2) The valuation will not consider the effect, if any, of noncompliance with the Americans with Disabilities Act of 1990.

Future Legislation

1) The firm performing the valuation makes no determination as to the possible effect on the subject business due to future Federal, state, or local legislation.

2) The valuation would not consider the effect, if any, of any future Federal, state, or local legislation.

Prospective Financial Information

1) Any prospective financial information provided by the subject company has not been examined or compiled by the firm performing the valuation.

2) The firm performing the valuation does not express an opinion or other form of assurance on the prospective financial information or the related assumptions.

3) Usually there will be differences between prospective financial information and actual results because events and circumstances frequently do not occur as expected. These differences may be significant.

The Valuation Engagement

Summary
This is an engagement to estimate value in which a valuation analyst determines an estimate of the value of a subject interest by performing appropriate valuation procedures, and is free to apply the valuation approaches and methods they deem appropriate in the circumstances. The valuation analyst expresses the results of the valuation engagement as a conclusion of value, which may be either a single amount or a range of amounts.

Standard of Value

The standard of value used is “fair market value”. Fair market value is the price, in terms of cash or equivalent, that a buyer could reasonably be expected to pay, and a seller could reasonably be expected to accept, if the business were exposed for sale on the open market for a reasonable period of time, with both buyer and seller being in possession of the pertinent facts and neither being under any compulsion to act.

Asset Approach

1) The asset approach is generally considered to yield the minimum benchmark of value for an operating enterprise. The most common methods within this approach are net asset value and liquidation value.

2) Net asset value represents net equity of the business after assets and liabilities have been adjusted to their fair market values, assuming a hypothetical sale of its net assets as part of a going concern.

3) The liquidation value of the business represents the present value of the estimated net proceeds from liquidating the company’s assets in a quick and orderly piecemeal sale and paying off its liabilities.

Income Approach

1) The income approach serves to estimate value by considering the income (benefits) generated by an asset over a period of time. This approach is based on the fundamental valuation principle that the value of a business is equal to the present worth of the future benefits of ownership. The term income does not necessarily refer to income in the accounting sense but to future benefits accruing to the owner. The most common methods under this approach are capitalization of earnings and discounted future earnings.

2) Under the capitalization of earnings method, normalized historic earnings are capitalized at a rate that reflects the risk inherent in the expected future growth in those earnings.

3) The discounted future earnings method discounts projected future earnings back to present value at a rate that reflects the risk inherent in the projected earnings.

Market Approach

1) The market approach compares the subject company to the prices of similar companies operating in the same industry that are either publicly traded or, if privately-owned, have been sold recently.

2) A common problem for privately owned businesses is a lack of publicly available comparable data.


Huddleston Tax CPAs of Seattle & Bellevue
Certified Public Accountants Focused on Small Business

(800) 376-1785
40 Lake Bellevue Suite 100, Bellevue, WA 98005

Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.