Category Archives: Financial Planning / Investments

Small Business Owners Should Consider Accelerating Expenses, Delaying Receipts

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Robert Ricciardelli, a CPA and partner at Whittemore, Dowen & Ricciardelli, says a company about to make large investments in a plant or equipment should get a cost segregation study done.
Photo by Jesse Winters

By Jill Nagy

Despite uncertainty about the fate of the U.S. tax code,  advice from accountants for year-end tax planning remains similar to what it has always been: Try to accelerate expenses and delay receipts.

If anything, the prospect of possible reductions in tax rates and the elimination of some tax deductions, gives greater credence to that advice.

“There are a lot of unknowns,” said James E. Amell, a CPA in the Queensbury office of Marvin & Co. He expects corporate tax rates to come down but predicts that the Republicans in Congress will not make radical changes.

“They want some durability in what they do,” he said. “They don’t want to see everything changed again when the control of Congress changes.”

Robert Ricciardelli, a CPA and partner at Whittemore, Dowen & Ricciardelli, also in Queensbury, agreed. “It looks like something is going to get done,” he said. “It is tough to plan.”

Defer income, he advised, “even more so than usual.”

Deferring income until 2018 also defers the taxes on that income, possibly into a year when rates are lower. “Hold off on some of you billing,” Amell said.

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Business Report: Savings Plan Options

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Kevin M. Hedley is a partner with Hedley & Co. PLLC.

By Kevin Hedley

As Congress and the White House debate tax plans, there have been much discussed changes to the traditional 401(k) plan. The proposed plan to adjust the maximum limit for contributions has been tabled but we still have a long way to go before we have a tax plan in place.

That does lead to the questions—What are the limits for various retirement plans and what are some options for a small business owner to save for retirement?

Depending on your immediate and long term goals there are plenty of options. There are defined benefit plans, Defined contribution plans and other retirement savings plans such as SEPS, SIMPLES and IRAs to name a few. All of these plans allow a deduction from current income if a contribution is made according to the respective plan terms. The differences between them include the amount of contribution and the costs of administering each plan.

Benefits are paid from these plans in most cases at retirement, death, disability, or separation from service. Distributions from plans that do not fall into one of the allowed categories are also subject to penalty ranging from 10 percent to 25 percent.

Under a defined benefit plan, an employer makes annual contributions to the plan to provide each participant with a set benefit at retirement. Contributions to the plan are actuarially determined, and the plan can be integrated with social security. An integrated plan reduces the contribution for the lowest-paid employees and still allows for a significant contribution on behalf of the owner and key executives. Benefits under the plan are fixed using a definite formula. Typically, the formula expresses the benefits in one of the following ways:

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Advice For New Business Ventures: Be Sure There Is Cash On Hand To Keep Things Afloat

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Paul Dowen is a managing partner of Whittemore, Dowen and Ricciardelli LLP.
Courtesy Whittemore, Dowen and Ricciardelli, LLP

By Jennifer Farnsworth

The best advice Paul Dowen, a managing partner of Whittemore, Dowen and Ricciardelli, LLP in Queensbury, can give to business owners is pretty simple: Have cash. 

Dowen said the number one thing he tells small business owners, or those looking to open a small business is have enough cash in a reserve.

“I tell people just starting up—hoard your cash, be prepared,” said Dowen.

Dowen said when starting a business, people  should not be undercapitalized. They need to figure out how quickly cash can be generated. He recommended having enough cash to live on for three months, so that until a person can be solvent before collecting the first paycheck as a small business owner.

“If you don’t have that, then it is best to wait on the startup,”said Dowen.

For current business owners, he gives similar advice. He warns against purchasing things that won’t help generate a cash flow. Most banks are happy to finance equipment for small business owners, especially items that will enhance the business and generate more equity.

Dowen also advises to have a business plan in writing to serve as a guide to short- and long-term goals. It should be a clear plan that addresses sources of income and the demographics of target customers. Businesses need to know who they are marketing to, because it will greatly affect cash flow.

“That is how you will grow  and make money. Ninety five percent of businesses fail because of cash flow,” said Dowen.

Dowen recommended using marketing tools like social media to tap into potential customers. Once that research is done, look to find ways to finance the business. Save as much as possible and make sure the venture can afford to lose money if things don’t go as planned.

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