Author: Alexis Long

Categories
Construction

Building the Future of Construction with Digital Transformation

By Ian Shapiro, Adam Rouse and Malcolm Cohron

The construction industry is due for a digital renovation. Faced with challenges around project efficiencies, ongoing safety concerns and flatlining labor productivity levels, the industry’s sluggish adoption of new technologies has reached an inflection point. Digital transformation requires changing processes and using new resources that harness the power of data to improve communication, efficiency, productivity and safety. This can position construction firms for profitable growth in a highly competitive industry, while also addressing workforce challenges.

The construction industry has a workforce that skews older, and as more baby boomers head toward retirement, the industry faces a labor shortage that’s poised to get worse.  According to the U.S. Bureau of Labor Statistics, there were about 300,000 construction job vacancies in June 2019, and the industry is expected to need 747,000 more workers by 2026. While the demand for skilled craftspeople has continually increased, fewer young people are entering the industry.

Potential recruits just don’t see construction as an attractive and viable career option, especially when other sectors are considered more tech-savvy and offer perks that appeal to millennial workers. To navigate these conditions and sharpen their competitive edge, construction companies need to adopt a bifurcated strategy: invest in new technologies to streamline operations and lower costs from blueprint to final product, and invest in the workforce through retraining initiatives and by bolstering the talent pipeline.


Addressing Old Challenges with New Technology

Transforming construction means more than introducing modern technologies to the industry: Technology correctly incorporated has the effect of rippling through and improving interrelated processes. This requires assessing the current state of a business, strategizing for the future state and then mapping a journey to that future.

Digital transformation goes far beyond digitizing analog functions; it enables a fundamental shift in how a business operates so that it can compete in a digital world. Three key areas of transformation are ultimately enabled by end-user adoption: Digital Business enables growth, Digital Process improves efficiency and profitability and Digital Backbone securely facilitates usability for business needs.

Identifying and adopting valuable digital tools, data-enabled hardware and field software can provide a solid foundation for sustained growth. For example, using drones or unmanned aerial vehicles (UAVs) for aerial photography can help expedite a land survey and assist planning through digital imaging techniques, precise topographic mapping software and data analytics that inform building strategy. Continued UAV surveillance can also help secure the site and inspect for safety hazards or structural issues. When applied in conjunction with 3-D printing, automated equipment tracking and progress reporting, these innovative building techniques reduce the time, effort and cost involved in more traditional construction approaches.

In an industry that has been challenged by disruptions to the price of materials—including tariffs of 25% on steel and 10% on aluminum imposed in 2018—increasing efficiencies and reducing controllable costs are more important than ever. Innovative software can identify and quantify work tasks, reducing or eliminating extraneous work to help maximize time and minimize effort. Supply chain information can even be tracked in the cloud, increasing transparency and accuracy by collecting that data within a single platform. Digital tools not only support the project budgets and timelines, but also promote worker safety and sentiment.


Navigating Workforce Woes

Workforce challenges in construction abound. The industry has been contending with a lack of organized site management, miscommunications between the field and regional office and a downward trend in employee morale.

The flow of information from job site to regional office to corporate can be fragmented, delayed and incomplete. The amount of time it can take to input information into the system leads to lack of real-time visibility into a project’s progress, which can ultimately have an impact on cashflow. Integrating data can streamline communication and deliver more accurate information more quickly. Work in Progress (WIP) tools track work in real-time, making sense of data that can then be used to inform subsequent project plans. They also allow for more accurately designed scheduling with the appropriate amount of margin and risk tolerance built into project plans. Similarly, Building Information Modeling (BIM) can synthesize all essential aspects of a project’s input into a single plan with 3-D modeling, wherein contributors can stay in timely communication.

Digital transformation can also help attract younger workers to the industry by creating more jobs that require tech skills. U.S. News & World Report noted in 2018 that less than 10% of construction workers are younger than 25, while the median age is above 42 years old. Modernizing processes through increased adoption of technology can both create new jobs and future-proof the industry.

Technology also enables construction managers to standardize approaches across a project (or multiple projects), facilitating additional clarity in delegating responsibility and even safety. The IDC predicts 279 million wearables will be in use by the end of 2023, a technology that can be applied to increase site safety and monitor for productivity. For instance, sensors attached to workers’ clothing or hard hats can track signs of fatigue to prevent an accident, monitor body temperature to avoid hypothermia or heat exhaustion, send an alert through noise or vibration to indicate a hazard and provide supervisors with real-time information about the number and location of employees on site.

For companies who can augment their capabilities now, successful digital adoption may reinforce their competitive capabilities and lay the foundation for a successful future. From project management tools that offer real-time communication, updates and project overviews, to cloud and mobile technology, advanced uses for GPS, robotics, drones and more, innovative applications of technology can fundamentally change the project design and development process. Digital transformation can be the means for the industry to navigate workforce issues, discover new efficiencies and build an integrated platform to reinvigorate growth for generations to come.

This article originally appeared in BDO USA, LLP’s Real Estate & Construction Insights. Copyright © 2019 BDO USA, LLP. All rights reserved. www.bdo.com

Categories
News

New Changes to PPP Released

New reforms to the second round of Paycheck Protection Program (PPP) loans were recently announced in an effort to give more small businesses access to PPP funding. The changes benefit the smallest of businesses as well as organizations that were not included in the first round of relief. The changes are outlined in the following paragraphs.

 

As of January 17, 2021, self-employed farmers and ranchers (Schedule F filers) are now allowed to utilize gross income (Schedule F line on Form 1040) of up to $100,000 to qualify for the PPP. Before this change, net income (Schedule F line on Form 1040) was used to qualify.

 

Sole proprietors, independent contractors and self-employed individuals (Schedule C filers) can use gross income to qualify for the PPP; as with farmers and ranchers, these Schedule C filers previously utilized net income to qualify. These changes are not retroactive for borrowers that have already received a PPP loan.

 

Small businesses with less than 20 employees have a 14-day window ranging from Wednesday, February 24, 2021 at 9 a.m. ET to Tuesday, March 9, 2021, at 5 p.m. ET to apply for PPP loans. Applications submitted by businesses with less than 20 employees before the exclusivity period will still be processed. During this period, applications from organizations with more than 20 employees will be put on hold to allow for more focus on smaller businesses.

 

Ask your CPA if you are using the appropriate calculations for PPP relief. Contact us at ata.net/locations.

 

Sources & more information:

White House Briefing

SBA Resource

SBA Calculations

SBA Business Loan Program Temporary Changes; Paycheck Protection Program

 

 

 

 

Categories
Helpful Articles Tax

Didn’t contribute to an IRA last year? There may still be time.

If you’re getting ready to file your 2020 tax return, and your tax bill is higher than you’d like, there might still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the April 15, 2021 filing date and benefit from the tax savings on your 2020 return.

Who is eligible? You can make a deductible contribution to a traditional IRA if:

You (and your spouse) aren’t an active participant in an employer-sponsored retirement plan, or you (or your spouse) are an active participant in an employer plan, but your modified adjusted gross income (AGI) doesn’t exceed certain levels that vary from year-to-year by filing status.

For 2020, if you’re a joint tax return filer and you are covered by an employer plan, your deductible IRA contribution phases out over $104,000 to $124,000 of modified AGI. If you’re single or a head of household, the phaseout range is $65,000 to $75,000 for 2020. For married filing separately, the phaseout range is $0 to $10,000. For 2020, if you’re not an active participant in an employer-sponsored retirement plan, but your spouse is, your deductible IRA contribution phases out with modified AGI of between $196,000 and $206,000.

Deductible IRA contributions reduce your current tax bill, and earnings within the IRA are tax deferred. However, every dollar you take out is taxed in full (and subject to a 10% penalty before age 59 1/2, unless one of several exceptions apply).

IRAs often are referred to as “traditional IRAs” to differentiate them from Roth IRAs. You also have until April 15 to make a Roth IRA contribution. But while contributions to a traditional IRA are deductible, contributions to a Roth IRA aren’t. However, withdrawals from a Roth IRA are tax-free as long as the account has been open at least five years and you’re age 59 1/2 or older. (There are also income limits to contribute to a Roth IRA.)

Here are two other IRA strategies that may help you save tax.

1. Turn a nondeductible Roth IRA contribution into a deductible IRA contribution. Did you make a Roth IRA contribution in 2020? That may help you in the future when you take tax-free payouts from the account. However, the contribution isn’t deductible. If you realize you need the deduction that a traditional IRA contribution provides, you can change your mind and turn a Roth IRA contribution into a traditional IRA contribution via the “recharacterization” mechanism. The traditional IRA deduction is then yours if you meet the requirements described above.

2. Make a deductible IRA contribution, even if you don’t work. In general, you can’t make a deductible traditional IRA contribution unless you have wages or other earned income. However, an exception applies if your spouse is the breadwinner and you are a homemaker. In this case, you may be able to take advantage of a spousal IRA. What’s the contribution limit? For 2020 if you’re eligible, you can make a deductible traditional IRA contribution of up to $6,000 ($7,000 if you’re 50 or over).

In addition, small business owners can set up and contribute to a Simplified Employee Pension (SEP) plan up until the due date for their returns, including extensions. For 2020, the maximum contribution you can make to a SEP is $57,000.

If you want more information about IRAs or SEPs, contact one of our partners or ask about it when we’re preparing your tax return. We want to help you save the maximum tax-advantaged amount for retirement. © 2021

Categories
News Paris, TN Press Releases

Alexander Thompson Arnold Names New Partner

FOR IMMEDIATE RELEASE

For more information contact:

Alexis Long, Marketing Director

731-427-8571

along@atacpa.net

 

ALEXANDER THOMPSON ARNOLD NAMES NEW PARTNER

Alexander Thompson Arnold PLLC (ATA) is excited to name Elizabeth Russell Owen as the newest partner at ATA. Owen helps lead the Paris, Tenn. office and has been with ATA for six and a half years. She is a certified public accountant, specializing in tax services. In her new role as a partner, she will be responsible for the 1040 practice for the Paris location and client accounting services.

 

“Elizabeth is a team player, works hard and has demonstrated the ability to maintain exceptional relationships with clients,” said John Whybrew, Managing Partner of ATA. “This promotion was well-deserved. We are excited to see Elizabeth continue to contribute to our firm as we move forward.”

Owen is a member of the ATA tax committee, the employee engagement committee and helps develop internal training programs. She handles all of the Paris office’s tax correspondence and is redesigning the client accounting services practice.

 

“As I began my career at ATA, I recognized the opportunities offered for career growth,” said Owen. “It has been my goal to be admitted as a partner for several years. I hope to play a part in advancing the firm in the coming years as a partner.”

 

Owen received her undergraduate degree in accounting, international business and political science from the University of Tennessee at Knoxville in 2013. She received her Master of Accountancy from Belmont University in 2014.

 

Owen has been married to her husband Kody since 2016. They recently welcomed their son, Abbott Shaw, to their family.

 

Owen is a graduate of Leadership Carroll County, a program that builds community awareness and produces stronger leaders in the county each year. She is also a 2017 graduate of the WestStar Leadership Program; her class developed WestTeach, a program that allows teachers to stay in the classroom but also learn to be leaders in their communities. Owen also serves on the Board of Directors for the Paris Rotary Club.

 

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About Alexander Thompson Arnold PLLC (ATA)

ATA is a long-term business advisor to its clients and provides other services that are not traditionally associated with accounting. For example, Revolution Partners, ATA’s wealth management entity provides financial planning expertise; ATA Technologies provides trustworthy IT solutions; Sodium Halogen focuses on growth through the design and development of marketing and digital products; Adelsberger Marketing offers video, social media, and digital content for small businesses; and newly added ATAES a comprehensive human resource management agency.

 

ATA has 13 office locations in Tennessee, Kentucky and Mississippi. Recognized as an IPA Top 200 regional accounting firm, it provides a wide array of accounting, auditing, tax and consulting services for clients ranging from small family-owned businesses to publicly traded companies and international corporations. ATA is also an alliance member of BDO USA LLP, a top five global accounting firm, which provides additional resources and expertise for clients.

 

Categories
Helpful Articles

How To Get Stuff Done

Businesses face disruption on multiple fronts, and they are struggling to get things done. Company leaders must contend with the pandemic’s health threat and the challenges of managing a remote workforce, as well as supply chain disruptions, demand shifts, resource constraints and more, all while devising critical plans for the road ahead. Combined with uncertainty about how long the pandemic will continue to disrupt daily life and the economy, companies are having trouble prioritizing their needs and adapting to the constantly shifting environment.

Here are actionable steps organizations should consider for getting things done in the current business climate. Using these best practices will increase the likelihood of completing your strategic initiatives in 2021.

Determine Priorities

Figure out what you need to focus on and develop a plan for getting it done.

  • Identify priority projects for the next quarter.
  • Ensure projects align with the broader organization’s strategic plans.
  • Sort those projects into individual workstreams with dedicated teams.
  • Make actionable checklists for each project.
  • Create project benchmarks and define KPIs.
  • Establish a monthly/quarterly review cadence for the initiatives with the executive team. Review all major initiatives, progress to date and the current business environment. Reprioritize where appropriate.

Assign the Right People

Identify your dedicated team—with the appropriate combination of skillsets and personalities—to ensure the project gets the attention it needs to be accomplished successfully, on time and on budget.

  • Designate a specific person or team to be responsible for a project.
  • Identify a senior-level champion for the project/initiative to help ensure firm-wide buy-in.
  • Ensure the project team has productive group chemistry and the right combination of skillsets. At minimum, you’ll need a big-picture visionary, a strategist to turn that vision into an action plan and a tactical executor.
  • When building the team, look for high performers outside of your regular circles to spread the opportunity to more professionals and provide them the opportunity to expand their skillsets.
  • Be judicious about who is on the team. Keep only those who believe in the project and want it to succeed.
  • Be realistic about team members’ workloads. Try to offload less important work that project members may be doing so they can dedicate more time to their assignments on the project.

Build a Bird’s-Eye View

You’ll need a method of communicating all the projects happening throughout the business to company leadership and other parts of the organization. Getting a big-picture view also allows you to assess how your people’s time is being used, whether you are relying too heavily on a few professionals and if the organization is taking on more than it can handle.

  • Track all the various projects in your organization in a centralized location, using common metrics for monitoring success, with the help of dashboards to provide the big picture. Ensure all dashboards are easy to use and are fed by accurate, real-time data. Don’t rely solely on dashboards, however. Remain in regular communication with the project team who can provide more context to the data and share qualitative updates that aren’t as easily tracked.

Foster a “Fail Fast” Mindset

In the current environment, it is more important to act swiftly than to wait and strive for perfection. If you try to plan for every eventuality, you may be too slow to respond adequately to a crisis or seize a new opportunity.

  • Don’t wait for perfection—start executing. Encourage a “fail fast” organizational culture, and not just for times of crisis.
  • Assess the progress and value of all projects on ongoing basis—at least monthly and, if feasible, bi-weekly.
  • Are they moving the needle for your business?
  • Evaluate the progress of each project against predetermined KPIs and milestones. Is the project meeting those KPIs, and do they bring the expected ROI? ROI comes in many forms (e.g., revenue protection, revenue generation, increased profitability, cost avoidance, etc.), so define the ROI you’re aiming for to measure the project’s success and try to identify quick wins in the early stages.
  • Based on this evaluation of impact and ROI, determine whether projects need to be discontinued, reprioritized or require more investment and support.

Develop the Next Generation

Even in a crisis period, make sure you are still taking steps to train your people and provide them with new opportunities.

  • As you address immediate needs, don’t neglect your organization’s future. Provide avenues for junior staff to get exposure to opportunities that further their growth.
  • Include at least one junior person on every project team. Even if they are just involved in project management, expose them to strategic conversations that are beneficial for their development.
  • Teach them to be students—and, ultimately, champions—of the “fail fast” mindset you’re encouraging in the organization. The next generation of leaders will take up that mantle.

Whether you are trying to overcome financial challenges, capitalize on a new opportunity or adapt to shifting market conditions, how swiftly and effectively you act in the next few months could have significant implications for your business’ long-term success. Don’t wait, get started today.

Categories
Helpful Articles Tax

Take Advantage of FSA Grace Period

FSA written on a wooden cubes.

Flexible Spending Account (FSA) rules just got more flexible.

FSAs allow employees to use tax-free dollars to pay qualified expenses, subject to limits. Due to the pandemic, the Consolidated Appropriations Act (CAA) temporarily loosens some limits for health FSAs and dependent care FSAs.

One such change is a longer grace period after the end of a plan year, when employees can apply unused funds for expenses incurred in the grace period. Under prior law, the grace period was 2 ½ months, before unused funds may be forfeited. The CAA gives employers the option to amend their FSA plans, extending the grace period to 12 months after the end of 2020 and 2021.

Visit this link for more details: https://bit.ly/3avwrSj

If you would like more information or guidance with your FSA, contact one of ATA’s locations today!

Categories
Helpful Articles Tax

What are the tax implications of buying or selling a business?

Merger and acquisition activity in many industries slowed during 2020 due to COVID-19, but analysts expect it to improve in 2021 as the country comes out of the pandemic. If you are considering buying or selling a business, it’s important to understand the tax implications. 

Two ways to arrange a deal 

Under current tax law, a transaction can be structured in two ways: 

1. Stock (or ownership interest). A buyer can directly purchase a seller’s ownership interest if the target business is operated as a C or S corporation, a partnership, or a limited liability company (LLC) that’s treated as a partnership for tax purposes. The current 21% corporate federal income tax rate makes buying the stock of a C corporation somewhat more attractive.

  1. C corporation pros: The corporation will pay less tax and generate more after-tax income. Plus, any built-in gains from appreciated corporate assets will be taxed at a lower rate when they’re eventually sold.

The current law’s reduced individual federal tax rates have also made ownership interests in S corporations, partnerships and LLCs more attractive.

  1. S corporation pros: The passed-through income from these entities also is taxed at lower rates on a buyer’s personal tax return. However, current individual rate cuts are scheduled to expire at the end of 2025, and, depending on actions taken in Washington, they could be eliminated earlier. Keep in mind that President Biden has proposed increasing the tax rate on corporations to 28%. He has also proposed increasing the top individual income tax rate from 37% to 39.6%. With Democrats in control of the White House and Congress, business and individual tax changes are likely in the next year or two. 

2. Assets. A buyer can also purchase the assets of a business. This may happen if a buyer only wants specific assets or product lines, and it’s the only option if the target business is a sole proprietorship or a single-member LLC that’s treated as a sole proprietorship for tax purposes.

  1. Preferences of buyers. For several reasons, buyers usually prefer to buy assets rather than ownership interests. In general, a buyer’s primary goal is to generate enough cash flow from an acquired business to pay any acquisition debt and provide an acceptable return on the investment. Therefore, buyers are concerned about limiting exposure to undisclosed and unknown liabilities and minimizing taxes after a transaction closes. A buyer can step up (increase) the tax basis of purchased assets to reflect the purchase price. Stepped-up basis lowers taxable gains when certain assets, such as receivables and inventory, are sold or converted into cash. It also increases depreciation and amortization deductions for qualifying assets.
  2. Preferences of sellers. In general, sellers prefer stock sales for tax and nontax reasons. One of their objectives is to minimize the tax bill from a sale. That can usually be achieved by selling their ownership interests in a business (corporate stock or partnership or LLC interests) as opposed to selling assets. With a sale of stock or other ownership interest, liabilities generally transfer to the buyer and any gain on sale is generally treated as lower-taxed long-term capital gain (assuming the ownership interest has been held for more than one year).
  3. Obtain professional advice. Be aware that other issues, such as employee benefits, can also cause tax issues in M&A transactions. Buying or selling a business may be the largest transaction you’ll ever make, so it’s important to seek professional assistance. After a transaction is complete, it may be too late to get the best tax results.

Get in touch with one of our partners about your upcoming business endeavors and the tax implications regarding your plans. © 2021

Categories
Healthcare

Sick and Family Leave Tax Credit

Are you self-employed and a survivor of COVID-19? If so, you may be able to claim a sick and family leave tax credit under the Families First Coronavirus Response Act. The law allows certain self-employed individuals, who due to COVID-19 were unable to work or telework for reasons related to their health, to claim the refundable credit to offset their federal income tax.

The credit also applies to those unable to work or telework due to caring for a child with COVID-19. To claim the credit (up to $5,110) for 2020, the leave must have been taken between April 1, 2020, and Dec. 31, 2020. We’ll help determine your eligibility and file a form to claim the credit when we prepare your return. Contact your ATA representative for more information. 

Categories
Tax

Can your business benefit from the enhanced Employee Retention Tax Credit?

COVID-19 has shut down many businesses, causing widespread furloughs and layoffs. Fortunately, employers that keep workers on their payrolls are eligible for a refundable Employee Retention Tax Credit (ERTC), which was extended and enhanced in the latest law.

 

Background on the credit

The CARES Act, enacted in March of 2020, created the ERTC. The credit: Equaled 50% of qualified employee wages paid by an eligible employer in an applicable 2020 calendar quarter, Was subject to an overall wage cap of $10,000 per eligible employee, and Was available to eligible large and small employers.

 

The Consolidated Appropriations Act, enacted December 27, 2020, extends and greatly enhances the ERTC. Under the CARES Act rules, the credit only covered wages paid between March 13, 2020, and December 31, 2020. The new law now extends the covered wage period to include the first two calendar quarters of 2021, ending on June 30, 2021. In addition, for the first two quarters of 2021 ending on June 30, the new law increases the overall covered wage ceiling to 70% of qualified wages paid during the applicable quarter (versus 50% under the CARES Act). And it increases the per-employee covered wage ceiling to $10,000 of qualified wages paid during the applicable quarter (versus a $10,000 annual ceiling under the original rules).

 

Interaction with the PPP

In a change retroactive to March 12, 2020, the new law also stipulates that the employee retention credit can be claimed for qualified wages paid with proceeds from Paycheck Protection Program (PPP) loans that aren’t forgiven. What’s more, the new law liberalizes an eligibility rule. Specifically, it expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50% to 20% and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility.

 

We can help

These are just some of the changes made to the ERTC, which rewards employers that can afford to keep workers on the payroll during the COVID-19 crisis. Contact us for more information about this tax-saving opportunity. © 2021

Categories
Helpful Articles Tax

Taxpayer Opportunity to Accelerate Depreciation Expense Relating to RPTOB Election for Residential Rental Property

The December 27, 2020 emergency coronavirus relief package introduced a taxpayer-favorable change related to the real property trade or business (RPTOB) election made by taxpayers that own residential rental property. As a refresher, taxpayers that make the RPTOB election are exempt from the Section 163(j) business interest expense deduction limitation, but must depreciate nonresidential real property, residential rental property and qualified improvement property over longer recovery periods under the alternative depreciation system (ADS).

Prior to the amendment made by the Consolidated Appropriations Act, 2021, taxpayers making the RPTOB election were required to use an ADS recovery period of 40 years with respect to residential rental property placed in service before January 1, 2018, and 30 years for residential rental property placed in service after December 31, 2017. The Act changed the recovery period for residential rental property placed in service before 2018 to 30 years, thereby making the ADS life consistent for all residential rental property for an electing RPTOB, regardless of the placed-in-service date. Note that this modification only affects taxpayers that made (or will make) the RPTOB election, and only with respect to residential rental property placed in service before 2018. Accordingly, taxpayers that elect or are required to use ADS for reasons other than making the RPTOB election will continue to amortize pre-2018 residential rental property using a 40-year recovery period.

As the amendment applies retroactively to taxable years beginning after December 31, 2017, taxpayers that made the RPTOB election on their 2018 or 2019 tax returns and depreciated residential rental property using the 40-year recovery period are now considered to be on an impermissible method of accounting. To correct this issue, Rev. Proc. 2019-8 indicates that an electing RPTOB that fails to depreciate its nonresidential real property, residential rental property and qualified improvement correctly under the ADS (including using an impermissible recovery period) must file an automatic Form 3115 (DCN #88) with a timely filed (including extensions) federal income tax return for the year of change and a copy of the Form 3115 must be filed with the IRS Ogden, UT office no later than the filing date of that return. Thus, it is not necessary to amend prior year tax returns. The additional depreciation allowed as a result of the modification will be reflected entirely on the tax return for the year of change as a favorable Section 481(a) adjustment. As it is possible that the IRS will issue new procedural guidance to address this specific fact pattern in the near future, taxpayers should check for any additional updates before they begin preparing method changes.