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3 best practices for achieving organic sales growth

Most business owners would probably agree that, when it comes to sales, there’s always room for improvement. To this end, every company should strive for organic sales growth — that is, increases from existing operations unrelated to a merger or acquisition. That’s not to say a merger or acquisition is a bad idea, but you can’t rely on major moves like this to regularly boost your numbers. 
Let’s look at three best practices for achieving organic sales growth. 
  1. Attentive customer service: Premier customer service is more than just a smile and a handshake. Are your employees really hearing clients’ problems and concerns? Do their solutions not only fix the issue but also, whenever possible, exceed the customers’ expectations? The ability to conduct productive dialogues with your customers is a key to growing sales. Maintaining a positive, ongoing conversation starts with resolving any negative (or potentially negative) issues that arise as quickly as possible under strictly followed protocols. It also includes simply checking in with customers regularly to see what they may need. 
  2. Smart marketing: Do you often find yourself wondering why all your marketing channels aren’t generating new leads for your business? Visit our website here to see how we can serve you in this area. Most likely, it’s because some of those channels are no longer connecting with customers and prospects. Therefore, you might want to step back and reassess the nature and strengths of your company. If you work directly with the buying public, you may want to cast as wide a net as possible. But if you sell to a specific industry or certain types of customers, you may be able to grow sales organically by focusing on professional networking groups, social organizations and trade associations. 
  3. Great employees: Ultimately, people are what make or break a company. Even the best idea can fail if employees aren’t fully prepared and committed to designing, producing, marketing and selling that product or service. Of course, as you well know, employing talented, industrious staff requires much more than simply getting them to show up for work. First, you must train employees well. This means they need to know both: 
1) how to do their jobs, and 2) how to help grow sales. 
You might ask: Does every worker really contribute to sales? In a sense, yes, because quality work — from entry-level office staff to executives in corner offices — drives sales. 
Once an employee is trained, he or she must be periodically retrained. Happy workers are more productive and more likely to preach the excellence of your company’s products or services to friends and family. Sales may occur as a result.  
These best practices are, obviously, general in nature. The specific moves you need to make to boost your business’s sales numbers will depend on your size, industry, market and focus. Our firm can help you identify optimal strategies for organic sales growth and measure the results. 
Click here to consult with your long-term business partner.  © 2020
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The Tax Aspects of Selling Mutual Fund Shares

Perhaps you’re an investor in mutual funds or you’re interested in putting some money into them. You’re not alone. The Investment Company Institute estimates that 56.2 million households owned mutual funds in mid-2017. But despite their popularity, the tax rules involved in selling mutual fund shares can be complex.
Tax basics
If you sell appreciated mutual fund shares that you’ve owned for more than one year, the resulting profit will be a long-term capital gain. As such, the maximum federal income tax rate will be 20%, and you may also owe the 3.8% net investment income tax. When a mutual fund investor sells shares, gain or loss is measured by the difference between the amount realized from the sale and the investor’s basis in the shares. One difficulty is that certain mutual fund transactions are treated as sales even though they might not be thought of as such. Another problem may arise in determining your basis for shares sold.
What’s considered a sale
It’s obvious that a sale occurs when an investor redeems all shares in a mutual fund and receives the proceeds. Similarly, a sale occurs if an investor directs the fund to redeem the number of shares necessary for a specific dollar payout. It’s less obvious that a sale occurs if you’re swapping funds within a fund family. For example, you surrender shares of an Income Fund for an equal value of shares of the same company’s Growth Fund. No money changes hands but this is considered a sale of the Income Fund shares. Another example: Many mutual funds provide check-writing privileges to their investors. However, each time you write a check on your fund account, you’re making a sale of shares.
Determining the basis of shares
If an investor sells all shares in a mutual fund in a single transaction, determining basis is relatively easy. Simply add the basis of all the shares (the amount of actual cash investments) including commissions or sales charges. Then add distributions by the fund that were reinvested to acquire additional shares and subtract any distributions that represent a return of capital. The calculation is more complex if you dispose of only part of your interest in the fund and the shares were acquired at different times for different prices.
You can use one of several methods to identify the shares sold and determine your basis:
First-in first-out.
The basis of the earliest acquired shares is used as the basis for the shares sold. If the share price has been increasing over your ownership period, the older shares are likely to have a lower basis and result in more gain.
Specific identification.
At the time of sale, you specify the shares to sell. For example, “sell 100 of the 200 shares I purchased on June 1, 2015.” You must receive written confirmation of your request from the fund. This method may be used to lower the resulting tax bill by directing the sale of the shares with the highest basis.
Average basis.
The IRS permits you to use the average basis for shares that were acquired at various times and that were left on deposit with the fund or a custodian agent.
As you can see, mutual fund investing can result in complex tax situations. Contact us if you have any questions. We can explain in greater detail how the rules apply to you. © 2020
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Standard or Itemized?

What’s best for you, taking the standard deduction or claiming itemized deductions?

The standard deduction changes yearly and is based on age and filing status. The Tax Cuts and Jobs Act raised the standard deduction so that more people could benefit from its simplicity. Itemizing deductions requires more work, but taxpayers can save taxes if the total exceeds the standard deduction.

Eligible taxpayers may prefer to itemize if they: pay state and local income tax, mortgage interest, mortgage insurance, real estate or personal property tax; suffered a large eligible casualty loss; make significant charitable donations; and/or have high medical deductions. We can help choose your best path. Talk with your ATA business partner to know which is best for you. 

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New law helps businesses make their employees’ retirement secure

A significant law was recently passed that adds tax breaks and makes changes to employer-provided retirement plans. If your small business has a current plan for employees or if you’re thinking about adding one, you should familiarize yourself with the new rules.
The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into law on December 20, 2019, as part of a larger spending bill. Here are three provisions of interest to small businesses.
Employers that are unrelated will be able to join together to create one retirement plan. Beginning in 2021, new rules will make it easier to create and maintain a multiple employer plan (MEP). A MEP is a single plan operated by two or more unrelated employers. But there were barriers that made it difficult to setting up and running these plans.
Soon, there will be increased opportunities for small employers to join together to receive better investment results, while allowing for less expensive and more efficient management services. There’s an increased tax credit for small employer retirement plan startup costs. If you want to set up a retirement plan, but haven’t gotten around to it yet, new rules increase the tax credit for retirement plan start-up costs to make it more affordable for small businesses to set them up.
Starting in 2020, the credit is increased by changing the calculation of the flat dollar amount limit to:
The greater of $500, or the lesser of: a) $250 multiplied by the number of non-highly compensated employees of the eligible employer who are eligible to participate in the plan, or b) $5,000.
There’s a new small employer automatic plan enrollment tax credit. Not surprisingly, when employers automatically enroll employees in retirement plans, there is more participation and higher retirement savings. Beginning in 2020, there’s a new tax credit of up to $500 per year to employers to defray start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment. This credit is on top of an existing plan start-up credit described above and is available for three years. It is also available to employers who convert an existing plan to a plan with automatic enrollment.
These are only some of the retirement plan provisions in the SECURE Act. There have also been changes to the auto-enrollment safe harbor cap, nondiscrimination rules, new rules that allow certain part-timers to participate in 401(k) plans, increased penalties for failing to file retirement plan returns and more. Contact us to learn more about your situation at info@atacpa.net. © 2019
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ATA Named Top Tax Firm by Forbes

Alexander Thompson Arnold PLLC (ATA) is humbled to be recognized as a top tax firm in America. Research company, Stratista, worked with Forbes to compile the list of leading organizations, which only included 227 firms. This award displays ATA’s passion to work diligently with clients on their taxes to amplify their business. For more information visit Forbes’ website.
“We strive to provide our clients sound tax advice and expertise through heavy research and training,” said managing partner, John Whybrew. “It’s an honor to have our firm recognized by Forbes and be commended for our hard work.”
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 Center Point Business Solutions is a comprehensive human resource management agency.
ATA has 14 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.
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Family & Education tax planning 

Watch the Family and Education Tax Planning video here.

 

Family & Education

While the Tax Cuts and Jobs Act of 2017 has reduced or eliminated many tax breaks for the next several years, most child and education-related breaks remain intact or even enhanced.

Child Credit 

For each child under age 17, you may be able to claim a $2,000 credit.  This credit phases out for higher-income taxpayers, but the income ranges are much higher than before the Tax Cuts and Jobs Act.   If your dependent child is age 17 or older or if you have a dependent elderly parent, a $500 family credit is available, also subject to income-based phase out.

Tax credits reduce your tax bill dollar for dollar, so for many taxpayers, these expanded credits will make up for losing the dependency exemptions.

Education Credits

If you have children in college now or are currently in school yourself, you may be eligible for the American Opportunity Credit.  The maximum credit, per student, is $2,500 per year for the first four years of postsecondary education. Again, this credit is subject to income-based phaseouts, but if your income is too high for you to qualify, your child might be eligible.

 

Be sure you and your family take advantage of available credits and other tax-saving opportunities to make saving taxes a family tradition.

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The SECURE Act

In addition to a year-end funding bill, lawmakers finalized the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The retirement bill includes expansion of the automatic contribution to savings plans to 15% of employee pay, allows some part-time employees to participate in 401(k) plans and raises the age limit for IRA contributions from age 70½ to 72.

Also included in the retirement package are provisions aimed at Gold Star families, eliminating an unintended tax on children and spouses of deceased military family members. As with the funding bill, the Senate is expected to pass and the president to sign the bill by the end of the week.

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Individual Deductions and Updates

Watch the Individual Deductions and Updates video here. 
What’s happening with deductions in 2019?
The standard deduction for separate filers is $12,200 and for joint filers, it’s $24,400. Itemized deductions are more beneficial if taxpayers ‘bunch’ deductions into one year. The itemized deductions that may be able to be shifted from year-to-year are real estate taxes, state income tax estimates. This bunching strategy needs to be discussed with your tax advisor to most benefit.
Some expenses are limited or no longer tax-deductible
Let’s discuss what expenses are limited or no longer tax-deductible. State and local tax deduction, including sales tax, property tax, and state income tax, is limited to $10,000. Home office expenses and unreimbursed business expenses are no longer deductible if you are a W-2 employee. Personal casualty and theft losses are only allowed if it arises due to an event officially declared a federal disaster area. Finally, work-related moving expenses are not deductible, except for members of the Armed Forces.
Medical Savings and Spending Accounts – Health Savings Account and Flexible Spending Accounts
Health Savings Accounts also known as HSA’s are available to participants in qualified high-deductible health plans. You can contribute pre-tax income up to $3,500 for self-only coverage or $7,000 for family coverage into an employer-sponsored HSA account. HSAs can bear interest or be invested, growing tax-deferred similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a balance from year to year, allowing the account to grow.
Flexible Spending Accounts, also known as FSA’s, can be funded with $2,700 pretax income in an employer-sponsored account but have limitations on what can be rolled over to the following year based on the employer plan. The plan pays or reimburses you for qualified medical expenses. What you don’t use by calendar year’s end, you generally lose.

 

Contact your CPA to discuss these deductions in more depth.
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Estate and Gift Tax Planning

Watch the gift and estate tax planning video here.
Estate Planning
Because the Tax Cuts and Jobs Act has put estate and gift tax exemptions at record-high levels, fewer taxpayers are worrying about these taxes. But the high exemptions currently are available only through 2025 and Congress could pass legislation that reduces the limits sooner. So whether or not you’d be subject to estate tax at the current exemptions, it’s a good idea to consider if you can seize opportunities to potentially lock in tax savings today.
Estate Tax
While the TCJA keeps the estate tax rate at 40%, it has doubled the lifetime exemption base amount from $5 million to $10 million. The inflation-adjusted amount for 2019 is $11.4 million.
Gift tax
The gift tax continues to follow the estate tax, so the gift tax exemption also has increased under TCJA. You can exclude certain gifts of up to $15,000 per recipient in 2019 or $30,000 per recipient if your spouse elects to split the gift with you, without depleting any of your lifetime gift and estate tax exemption.
Choose gifts wisely.
Donations to qualified charities aren’t subject to gift tax, as well as tuition and medical expenses paid directly to the provider. Consider both estate and income tax consequences and the economic aspects of any gifts you’d like to make. To minimize estate tax, gift property with the greatest future appreciation potential. To minimize your beneficiary’s income tax, gift property that hasn’t appreciated significantly while you’ve owned it. To minimize your own income tax, don’t gift property that’s declined in value. Instead, consider selling the property, taking the tax loss and then gifting the tax proceeds. Have questions? Please contact us at ATA.
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Tax planning for your investment portfolio

 

Watch planning for your investment portfolio video here.

Recent changes to ordinary income tax rates and tax brackets affect the tax you pay on investments.  Your long term capital gains rate can be as much as 20 percentage points lower than your ordinary income tax rate, which make long-term gains more attractive. 

If you’ve sold investments this year, and have substantial gains, then you may want to review your portfolio for unrealized losses and consider selling them before year end to offset your gains.  

Income investments 

Some types of investments produce income in the form of dividends or interest. Here are some tax consequences to consider: 

Qualified dividends are taxed at the favorable long-term capital gains tax rate rather than at your higher ordinary-income tax rate.

Interest income generally is taxed at ordinary-income rates. So stocks that pay qualified dividends may be more attractive taxwise than other income investments, such as CDs and taxable bonds. 

Capital Losses

If net losses exceed net gains, you can only deduct up to $3,000 of the losses per year.  You carry forward the excess losses until they are used.

Although tax considerations are important, don’t let them control your investment decisions. You need to consider your goals, risk tolerance, fees, and other factors related to buying and selling securities.