Posts Tagged ‘blog’

Your Physical Presence is No Longer Required

By Courtney Morin
Senior, Tax Services
cmorin@sponselcpagroup.com

As our economic and social landscapes continually change through products purchased and consumed, so do the regulations as well as the way business is conducted. This can be demonstrated by the US Supreme Court’s recent ruling of South Dakota v. Wayfair, Inc., which overturned a previous 1992 decision related to sales tax. This latest ruling states that a physical presence is no longer needed, making remote sellers obligated in collecting and remitting sales tax.

Effective October 1, 2018, Indiana will begin enforcing the state’s economic nexus law, requiring remote sellers to start collecting sales tax for purchases made within Indiana. Under Indiana law, sellers not having a physical location in Indiana are required to obtain a registered retail merchant’s certificate if a seller meets either one or both of the following two conditions in either the previous calendar year or the current calendar year:

  • Has gross revenue from sales within Indiana in excess of $100,000 or
  • 200 or more separate transaction within Indiana

What does this mean to online consumers? For purchases made online, where sales tax has not yet been charged or collected, the submission of use tax may be required. In some states imposing an income tax such as Indiana, consumers can report this portion of sales taxes on a transaction, not charged by the seller on their income tax return. The applicable rules and rates may vary from state to state.

Even as Indiana has provided explanation and guidance of the modified stance on this specific sales tax issue, how are other states examining this development that could affect your business? The progress made in regard to this change — along with requirements — vary from state-to-state. If you are a remote seller to other areas outside of Indiana, your business potentially has exposure of additional tax that may be required based upon this Supreme Court case. This is where a trusted advisor is crucial in steering you through the complexities of these matters.

Sponsel CPA Group can offer assistance and consultation related to the recent sales tax changes and answer questions such as:

  • Is my business required to register as a remote seller?
  • What are the steps for registering as a remote seller?
  • What steps are required in other states related to this recent court case?
  • How should retroactive sales from my business be treated?

In addition to updated laws in multiple states, this recent change and the court case ruling add another level of complexity that business owners need to be made aware of and understand. Feel free to contact a Sponsel CPA Group professional to assist with your questions related to this topic or other financial areas at (317) 608-6699.

Do You Need to Pivot? — Adapt to the Market

By Tom Sponsel, CPA/ABV, CFF
Managing Partner
tsponsel@sponselcpagroup.com

Life doesn’t always go as planned, especially in the business world. But don’t be afraid of change! Use any detour or setback as a springboard toward new and exciting opportunities. As the year slowly draws to a close, you may want to ask yourself if your business needs to pivot in a different direction — which may include changes in product or services, marketplace, management, salesforce, maybe even the go forward vision for your company!

Many companies have done this with great success. Take PayPal, for instance. After operating as a subsidiary of eBay for more than a decade, it went on to thrive as an independent company. It changed its business model to attract users across multiple platforms outside of the eBay auction community. It smoothly stepped out of eBay’s shadow and formed its own identity.

Ash & Elm Cider Co., the start-up business featured in this month’s client profile, also adapted in a similar way. The founders, Aaron and Andréa Homoya, originally wanted to tap into the craft beer industry. But as they saw it crowding the market in Indianapolis, they decided to stand out by making and selling hard cider instead. (Read more about them and their company here.)

Other companies that successfully changed their business models include: Yamaha, which started as a piano company and went on to manufacture motorcycles, car engines, boats and more; Nokia, whose roots as a paper mill grew into the start of a mobile communications brand; and Abercrombie & Fitch, which detoured from sporting goods to focus on selling clothes. These are just a few of the many examples of booming businesses that have evolved for the better.

The bottom line is that you shouldn’t stubbornly stick to your initial vision if your results are disappointing — a brighter opportunity may be around the corner. Strive for innovation and challenge the status quo. And most importantly, prepare for failure. But don’t think of it as a final step — it’s just part of the pathway toward success.

This advice is very true for “start–ups,” which are trying to bootstrap their way to financial stability, as well as mature companies. Do you recall that IBM (the largest mainframe computer company at the time) thought the personal computer was not going to be an acceptable product in the marketplace and left the marketplace wide open for young startups at the time — like Dell!

Be OPEN to the PIVOT: Listen to your customers and the marketplace!

If we can assist you further with achieving success in your business or personal affairs, please contact Tom Sponsel at (317) 608-6691 or email tsponsel@sponselcpagroup.com.

Client Profile: Ash & Elm Cider Co.

Ash Elm & Cider Co. is a relatively new family business run by the husband and wife team of Aaron and Andréa Homoya. After roughly two years of planning, they opened the craft cidery in the summer of 2016.

Aaron, the chief fermentation officer, has been brewing beer at home for more than a decade. But as the craft beer industry seemed to be crowding the market in Indy, he and Andréa decided to shift their focus to hard cider. A particularly tasty cider they tried in Ireland inspired them to start making their own. And they wanted to stand out from the local competition.

“No one in Indianapolis was making craft cider the way we wanted to, and as a category, cider was really becoming a lot more popular nationwide,” Andréa said. “The skills transferred pretty well between brewing and cider-making, so we decided to go for it.”

Aaron kept his day job as an electrical engineer, moonlighting as the manager of Ash & Elm’s cider-making process. As CEO, Andréa oversees the daily operations, making sure everything in the tasting room and kitchen runs smoothly and working with local bars and restaurants to get the company’s ciders on taps and retail shelves all around town.

Everything at Ash & Elm is local — from the Indiana-grown apples used to make the ciders to the meats and cheeses on its delicious pressed sandwiches. Aaron and Andréa take pride in the company’s Hoosier roots.

The Homoyas’ relationship with Sponsel CPA Group began when Ash & Elm was still in its infancy.

“Our lawyer, Dave Castor, recommended Sponsel back when we were still a business in planning,” Andréa said. “We were looking to secure some bank financing and needed help with our business projections. We hired Sponsel to help us with that project, and then we decided to continue the relationship after finding them great to work with and very knowledgeable.”

Ash & Elm continues to grow and thrive. Keep an eye out for its upcoming seasonal ciders — pumpkin, raspberry and winter spice. Click here to learn more about the company.

Employee Spotlight: Philip Jackson

Not to be confused as the former professional basketball coach, Philip Jackson is a new Manager in our firm’s Tax Services department. He is also a CPA with more than 20 years of experience in public accounting in assisting businesses, individuals and not-for-profits through tax consulting and compliance services. A University of Indianapolis graduate with a bachelor’s degree in accounting, Philip enjoys explaining tax considerations and options to keep clients informed of current and potential tax regulations. This allows him to proactively provide knowledge and expertise from a tax planning perspective.

Having experience with clients in a wide variety of industries and sizes allows Philip to focus on a business’s specific needs and tailor the various solutions accordingly. This industry experience includes manufacturing, real estate, professional services and healthcare, to name just a few. Philip also has experience and interest working with technology companies and startups to provide business entity selection considerations and financial guidance.

As Chairman of the Indiana CPA Society’s Tax Resource Advisory Council and member of the Indiana Commissioner’s Tax Advisory Council, Philip works with federal and state taxing authorities as an advocate for clients and the public regarding various tax matters. In addition, he contributes his time as the leader of the All Pro Dad’s program for a community school, founded by former Indianapolis Colts head coach, Tony Dungy.

Philip’s wife is a fourth grade elementary school teacher and has two children, Katherine (age 12) and Thomas (age 7). When he’s not crunching numbers, Philip enjoys attending his children’s school and extracurricular activities, watching movies, following politics and traveling.

Financial Reporting for Not-for-Profit Entities — A NEW STANDARD!

By Lila Casper, CPA
Senior, Audit & Assurance Services
lcasper@sponselcpagroup.com

ASU 2016-14 is a new Financial Reporting Standard affecting not-for-profit (“NFP”) entities, which is effective for fiscal years beginning after December 15, 2017. In the year of implementation, all prescribed provisions must be applied. Some of the primary changes in NFP financial reporting pertain to net asset presentation, a required liquidity and availability of resources disclosure, and expense reporting.

On the Statement of Financial Position, the minimum required presentation includes presenting net assets under the following two classifications: without donor restrictions and with donor restrictions. An allowable alternative presentation includes additional categories of net asset classifications, which are considered subsets of without donor restrictions and with donor restrictions, and they can include the following: undesignated, operating reserve, board-designated (for specific purpose), time restricted for future periods, purpose restricted, and endowment fund. NFP entities are also required to disclose the timing and nature of restrictions, the composition of net assets with donor restrictions, an analysis by time, purpose, and perpetual restrictions, and board designations.

Board-Designated Net Assets are defined as net assets without donor restrictions subject to self-imposed limits by action of the governing board. NFP entities are required to disclose the nature and amounts of board designations. Amounts may be earmarked for future programs, investment, contingencies, purchase or construction of fixed assets, or other uses. Organizations will need to review their existing policies regarding board designations.

In addition, NFP entities are required to provide qualitative information (in the footnotes to the Financial Statements) on how they manage their liquid available resources as well as their liquidity risk and quantitative information that communicates the availability of their financial assets at the Statement of Financial Position date to meet cash needs for general expenditures within one year. Also note that the availability of a financial asset may be affected by its nature, external limits imposed by donors, laws, and contracts or internal limits imposed by governing board decisions.

The schedule of functional expenses will no longer be an optional supplemental schedule. It is now a required part of the basic financial statements. The new standard also expanded on guidance for allocations of Management and General Expenses.

Sponsel CPA Group has expertise in not-for-profit financial reporting and can go over the new rules with you to find the best options for your organization. If you have any questions please contact Lila Casper at (317) 613-7860 or email lcapser@sponselcpagroup.com.

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