Fixed Asset Management – Capitalizing Expenditures

Should my business expense or capitalize?  As with many regulations in taxation the answer is, “it depends.”  In March of 2008, the IRS proposed regulations that provide a de minimis rule that permits “small cost” items to be exempt from capitalization.  What is considered a small cost item is relative to each business.  According to the IRS definition of de minimis, small cost items would include items that have so little value (in comparison to the company in its entirety) that accounting for them would be unreasonable or administratively impractical.

Generally, the first step in determining what a business will consider a “small cost,” is to write a company policy that describes guidelines for classifying expenditures. While compiling a policy, a company should consider the type of property (tangible or intangible? is it an improvement?), the life of the property (greater than one year?), and also the cost of the property (is it material to the company’s bottom line?).

Since the IRS does not provide black and white guidelines for classifying expenditures, a company can substantiate their actions by implementing and consistently applying a capitalization policy.  Levin Swedler & Company – Certified Public Accountants can answer questions regarding fixed asset acquisitions, disposals, and depreciation classification, along with the rules under federal and state law related to the availability of bonus depreciation on newly capitalized assets.

Keep an eye out for my next blog post that will touch on specific frequently asked quentions regarding the capitalization of expenditures.

Written By: Matthew Migal

American Jobs Act of 2011

Levin Swedler & Company │ Certified Public Accountants │ Akron, Ohio CPAs

President Obama has challenged Congress to immediately pass the American Jobs Act of 2011.  This act is a $447 billion jobs package, which includes payroll tax cuts and tax credits to encourage hiring, along with extended 100 percent bonus depreciation, and would be paid for by limiting deductions for higher income taxpayers and changing the taxation of carried interest.  The offsets, however, would not take effect if the Joint Select Committee on Deficit Reduction achieves additional savings.  President Obama described the jobs package to Congress on September 8 and unveiled the legislative text on September 12.

Key points:

1. The 2011 employee-side payroll tax cut for Social Security’s Old Age, Survivors, and Disability Insurance (OASDI) to be expanded to drop from 4.2 percent for calendar year 2011 (down from 6.2 percent for calendar year 2010) to 3.1 percent for calendar year 2012.  The president’s proposal includes similar payroll tax relief for self-employed individuals for calendar year 2012.
2. Employer-side payroll cuts, were proposed to give businesses a similar payroll tax cut for wages paid up to $5 million, as well as a full payroll tax holiday to reward any business that experiences growth in its payroll, driven by new hires, increased wages  or both.
3. President Obama also proposed giving qualified employers a 100 percent payroll tax credit (called a “payroll increase credit”) in cases of payroll growth for wages up to $50 million.
4. A proposal for tax credits for hiring individuals deemed long-term unemployed, defined as those who have been looking for work more than six months,
5. President Obama has proposed to extend 100 percent bonus depreciation for one year through 2012.
6. The president has proposed to delay the effective date of three percent government withholding until after 2013.
7. President Obama has proposed to effectively limit the value of itemized deductions and certain other tax expenditures for higher income taxpayers to 28 percent starting in 2013.
8. Other proposals include those for carried interest, oil and gas incentives,
   corporate jets, and foreign tax credit safeguards.

GOP leaders in the House have told the White House they will schedule hearings on the American Jobs Act as soon as possible.  We will have to wait and see where the Act goes from here.

Click here to read more about the American Jobs Act of 2011.

Written by: Kim Orians, CPA

CPAs Counting the Miles – 2011 Akron Marathon

During the summer of 2011, Levin Swedler & Company went to work…… not on compilations or reviews, tax returns or just plain old number crunching for the fun of it.  But instead, they decided to train for the better half of the summer in preparation for an event people get excited about when the thought of strenuous leg pain and the gasping of air crosses their minds.  Yes, that could be an event none other than the Road Runner Akron Marathon on September 24, 2011.

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Let’s make one thing clear – It was not easy.  Counting those miles while training, just wasn’t quite the same as the counting performed in cozy computer chairs inside an air conditioned office.  However, it was evident on race day that both Team Levin, and Team Swedler now complete with the addition of a few close family members, and friends, were ready to run.  The athletes faced ridiculously high inclined hills, ran for miles with no end in sight, and even had to dodge the occassional big yellow chicken, or the professional juggler. Yet, despite the obstacles, both teams finished strong.

An estimated 11,000 runners participated in the Akron Marathon with an additional 3,000 volunteers and 2,000 children in the Kids Fun Run.  Proceeds from participants after covering race expenses were donated to a variety of charities, such as Stewart’s Caring Place, American Cancer Society, and Akron Children’s Hospital, among others. The race not only brought a group of CPAs together, but an entire city of people.

Levin Swedler & Company had a truly wonderful time at the Akron Marathon, and we can only hope this event will be held for years to come.

If you are interested in seeing more pictures check out runphotos.com, and search our relay teams by the following bib numbers: Team Levin – 8206  & Team Swedler – 8207.

Written by: Richard Boswell, CPA

Can QuickBooks Do More For Your Small Business?

Many small business owners use QuickBooks merely as an electronic checkbook; depositing money as it comes in and paying bills as they arrive.  As a company continues to grow and becomes more complex, how can QuickBooks simplify a small business’s accounting needs? QuickBooks can track your payables, your receivables, and provide detailed reports at your request.

Levin Swedler & Company │ Certified Public Accountants │ Akron, Ohio CPAs

• As your business grows, you will find that QuickBooks is more than capable of growing along side of you.  So many small business owners keep track of their bills by putting them in a drawer.  There will come a point in time when this is no longer good enough.  Time to let QuickBooks do the tracking for you!
• Need help figuring out exactly how much a customer owes you? Once you start using QuickBooks to generate your invoices, you will be surprised by the amount of information available to you at the push of a key.
• You have a gut feeling that you made $X for this last month, but where did the money go?  QuickBooks provides reports that will show you exactly how much money came in, and exactly how you spent it.

So many users are unaware that many of these features are available.  By talking with a trusted professional about how you currently use QuickBooks, and discussing what information you would like to be able to see, you can unleash some of the potential already
available at your fingertips with QuickBooks.

Written by: Kathryn M. Drake, CPA

Employee Census Updates

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  Did your 401(k) plan service provider send you a request for an employee census update? This usually happens quarterly or annually. It often looks like they have most of the information already, so why is this a big deal? … Continue reading →

Credits For New Ohio Employers

Is your company investing in a new business in Ohio?  If you are, there are new incentives available from the state of Ohio. The state recently enacted (July 2011) something called a “Small Business Investment Credit” and a “Job Retention Credit.”

The Small Business Investment Credit is available for individuals, estates, trusts, or pass-through entities that invest in a business must have either 50 employees in Ohio or more than 50% of the business’ employees are in Ohio. The business must either have assets of 50 million or less, or sales of $10 million or less. (These are usually pretty easy requirements to meet.) The credit equates to 10% of the qualifying investment and unused credits may be carried forward for 7 years

The Job Retention Credit is targeted towards larger business start-ups. To be eligible for this credit,a business must have a total annual payroll of at least $20 million and invest
a minimum of $5 million at a project sit. They are required to 1) retain a minimum of 500 full-time equivalent employees within Ohio and maintain an annual payroll for at least $20 million for the term of the credit; or 2) maintain an annual payroll of at least $35 million for the term of the credit.

If you think that either of these might apply to your situation, contact us at 330.666.4199 and we can assist you in making a determination and/or applying for the credit.

Akron, Ohio – Certified Public Accountants

Welcome to our blog!

Levin Swedler & Company is an Akron, Ohio CPA Firm, offering business consulting, financial statement preparation, tax preparation & planning, QuickBooks & Peachtree support, auditing, and business valuations.

In an effort to stay with the times, we have decided to add our voice to the blogosphere. Check back periodically for new postings. Also, within the next week or so, we plan on upgrading our current website.  Checkout our current website before we upgrade to the new platform, so that you can see the change.

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