Month: November 2021

Believe it or not, risks associated with tax and tax compliance still keep CEOs in the US and around the world up at night, even in these COVID times when supply chain issues, the Great Resignation, and cybersecurity incidents grab all the headlines.

According to the KPMG 2021 CEO Outlook Pulse Survey, 14% of the 500 CEOs who were polled earlier this year said tax risk poses the greatest threat to their organization’s growth over the next three years—which was behind only cybersecurity risk at 18%.

In its report, KPMG said: “This focus on tax is markedly higher than recent years, with only 5% of CEOs identifying it as a top risk in 2018, less than 1% in 2019, and only 4% highlighting this as a risk area of primary concern in 2020. For years, KPMG tax leaders have posited that this is an issue that needs to be higher up on the executive team’s radar. Now, it’s decidedly there.”

Not only does a company’s management and tax executives have to worry about an already complex tax environment all over the world, including new tax policies and possible changes to country tax rates, but also a glut of tax liabilities arising from cross-border regulations and the rise in new unilateral rules. Laurie Hatten-Boyd, principal at KPMG, provides some insight on accounts payable tax compliance and the changing rules of cross-border payments to suppliers in this executive summary report

Supplier tax compliance is also a biggie

One important area of corporate tax compliance that doesn’t get a lot of attention from the press revolves around payments to suppliers—especially foreign suppliers. But there’s an accounts payable automated solution on the market that can make chief executives sleep more soundly when it comes to supplier tax compliance. That solution is from Tipalti

Founded in 2010, Tipalti provides a global mass payments platform to more than 1,500 customers—and you’re probably familiar with the names of some of the company’s clients: GoDaddy, Vimeo, Twitch, Roblox, ZipRecruiter, National Geographic, Roku, and Zumba.

Embedded into its A/P automated solution is a KPMG-certified tax compliance module that keeps the ghouls at the IRS off of Tipalti’s customers’ backs.

“Tipalti solves the highly complex and manual process of collecting supplier tax and banking information,” said Matthew Merrill, manager of partner and industry marketing for Tipalti. “We do this through digital capture from the very beginning during supplier onboarding. This accomplishes two things: it ensures that the correct tax information is collected upfront, which is easier said than done without a solution like this; and the information is validated before the first payment is even processed.”

While its competitors have targeted large conglomerates as customers, Tipalti works with companies of all sizes, and it works particularly well with fast-growing companies in the middle market. 

“What we’re trying to do is attract those established or growing middle-market companies that maybe are still using paper checks and are on old legacy payment systems. We integrate really well with NetSuite, QuickBooks Online, and Sage Intacct, but we’ve made a lot of updates to our solution to make sure that we are able to integrate with any enterprise resource planning system,” Merrill said. “We’re also trying to get exposure within the CPA community. We have an alliance team that will work with accounting firms that serve that market. We have found that accounting firms that recommend Tipalti to their scaling clients end up making their own jobs easier when it comes to tax compliance and end-of-year reporting.”

Besides KPMG, another CPA firm that has partnered with Tipalti is Naperville, IL-based Sikich LLP. Colleen McCaughey, director of client services at Sikich, said Tipalti is an important companion to the firm’s outsourcing and technology consulting services.

“Our partnership helps us to scale our clients, while also helping them avoid the typical pain points of increased payables complexity that comes with scale. It’s a no-brainer to work with Tipalti,” she added.

Tipalti is also looking to work with CPA firms that have middle-market clients that are becoming more complex—maybe they added a subsidiary or they expanded globally and have to make more global payments. Tipalti is set up to scale with them, Merrill said.

Tax form wizardry

As companies grow and expand their reach, their need for suppliers and vendors also increases—and paying suppliers both home and abroad is no picnic. Another thing that’s no picnic? Keeping track of all of the suppliers’ tax status forms.

For US-based suppliers, you’ve got Form W-9, Request for Taxpayer Identification Number and Certification, that needs to be requested. And for foreign-based suppliers, there are two: Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) or, for non-individuals, Form W-8BEN-E, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)

After the proper tax status form has been received, the company can then determine if the supplier should receive a Form 1099-MISC, Miscellaneous Income, or a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, and whether any US tax withholdings should occur at the time of payment.

Without an automated payments platform like Tipalti that reduces the risks of financial fraud and keeps track of all of these supplier tax forms, things can get messy in a hurry.

“We make year-end filing a breeze by helping with W-8 and W-9 collection, as well as 1099 and 1042-S preparation reports. Our platform helps them prepare the end-of-the-year tax forms, and every payment already has a W-8 or W-9 attached to it,” Merrill said. 

Tipalti users can’t make payments to suppliers until the supplier’s tax information—such as value-added tax (VAT) ID or US taxpayer identification number (TIN), business structure, and country/address—is registered in the Tipalti portal. Based on that information, the module’s embedded tax form wizard helps the supplier choose the correct tax form. And the forms are available on the platform 24/7.

“Once that tax form is selected, Tipalti will digitize the tax form and run it through our 1,000-plus rules engine to ensure the proper data has been provided. At year-end, Tipalti generates 1099 and 1042-S tax prep reports, and we’ll even calculate the necessary withholdings for our customers, as well, to protect them from IRS penalties,” Merrill said. “For non-US taxpayers, Tipalti collects local and VAT tax IDs in 49 other countries. Those go through over 3,000 validation rules to ensure accuracy.”

As a licensed money transmitter that operates in 196 countries with 120 currencies, Tipalti is able to offer suppliers a choice of payment method (country and currency), and suppliers are kept up to date on the status of their invoices and their payments.

“This really keeps suppliers happy,” he added.

Because the process of onboarding suppliers’ tax info is a piece of cake, it’ll free up your time to spend on other basic A/P tasks like invoicing. Tipalti can help with that, too

“For invoice processing, we have invoice capture with Optical Character Recognition technology, as well as built-in machine learning and managed services, which cuts out any manual re-keying of invoice details from the process and ensures a touchless invoice processing experience,” Merrill said.

The numbers don’t lie

Companies seem to really like this Tipalti product quite a bit. A 98% customer satisfaction rating and a 99% client retention rate is pretty good, right? And Tipalti is one of only 24 companies in America that has made both the Deloitte Technology Fast 500 and the Inc. 5000 fastest-growing companies lists for the last three straight years.

So if your middle-market company is still in the Dark Ages of using manual accounts payable processes, it’s not too late to automate A/P like a 21st-century company would.

Get started with Tipalti >

The post Get Your Precious ZZZZs and Let An Automated A/P Solution Handle Supplier Tax Compliance appeared first on Going Concern.

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Business owners often struggle with properly determining how to effectively and efficiently set up their overall business and tax structure.

Business owners often struggle with properly determining how to effectively and efficiently set up their overall business and tax structure. There are so many different terms out there, from “sole proprietorships” and “limited liability partnerships” to “corporations” and “limited liability corporations.” Knowing the difference between these different companies can help you determine the best route to take for your business. Here are some helpful key terms to know and the best way to distinguish between the two most commonly confused types of businesses — S corporations and LLCs. 

The Reason Why An S Corporation Would Want To Own An LLC

It can be challenging to know why an S corporation would want to own an LLC. Understanding the different nuances of an LLC and S corporation can prove tricky for a new business owner or entrepreneur. The reality is, people will typically desire a company that provides them with certain flexible options. That is precisely why business owners are leaning towards becoming LLCs. Ultimately, the different tax deductions from being an S corporation tend to be highly valued by business owners everywhere. That is why typically, consultants will encourage their clients to have an S corporation that owns an LLC for maximum benefits. 

Having An LLC WIth An S Corporation Election

There are so many different avenues you can take when it comes to starting your business. In fact, within an S corporation, payments and distributions are typically given to the partners proportionally based on their ownership percentage. The reality is, LLCs differ as they are not necessarily disbursed in the same manner. Instead, LLCs will typically disburse money to partners based on how the partners themselves deem appropriate.  

Bottom Line

Having the full knowledge about the difference between an S corporation and an LLC can help steer you towards the best type of business for your specific needs, goals, and desires. Being aware of the differences can help keep your aims in mind and allow you to be focused on all of your goals. 

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

 

The post Tricky Business Questions: S Corporations and LLCs appeared first on The Harding Group.

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https://www.digital-accountants.com/?p=509

It’s hard to remember that dark time in the not-so-distant past when we had to do things like print out directions instead of trusting our phones to lead the way. Alexa hasn’t even been around for a decade, and yet here we are today, with smart home setups that open up the house for us, feed the dog, and turn on our night lights before we go to bed. We might not have flying cars, but we certainly do live in the future.

As we connect more and more to “The Internet of Things,” you’d think we’d have more free time and less pressure on our shoulders. Yet we’re more stressed than ever. It seems like for every task we’ve automated, there’s some other inconvenience desperately trying to steal our attention: a flood of social media notifications, endless sales emails, the nagging smart home device telling you the coffee’s running low. The list goes on.

We’re saving so much time, yet somehow, we seem to have less of it than ever.

A 2013 Oxford study called The Future of Employment: How Susceptible Are Jobs to Computerisation? estimated that bookkeepers had a 97.6% chance of being automated in the next 20 years. If you’re a tax preparer reading this and thinking, “Phew, at least I’ll be safe,” don’t zen out just yet — the study gave tax preparers a 98.7% chance of being replaced by automated services.

Here’s the good news: Eight years after that study came out, we’re beginning to see automation take hold of the accounting industry, and so far there haven’t been any signs of an entirely robotic intern class at public accounting firms. The “robot panic” of the early ’10s has been replaced with an eagerness to explore and adopt technology that can take some things off accountants’ very full plates.

Take for example audit confirmations. It seems downright primitive to think of having to physically mail out confirmations now that they can be sent electronically. This change didn’t make auditors obsolete, it just freed them up to do more important things. Although many aspects of the profession can — and perhaps should — be automated, there will always be a need for professional judgment and client relationship management that haven’t been outsourced to technology yet. No doubt AI researchers are working on that one.

This brings us to the subject of your own life. While chances are high that your firm or business have already begun automating certain tasks that used to require several people to accomplish, many professionals forget about automating their own lives. And no, I don’t mean teaching your smart home how to turn off the lights. So what are some ways to do that?

Give yourself permission to take the “easy” way out

It’s 2021, we don’t even have to get off the couch to sort out dinner. And as glorious as that can be, no one over the age of 22 should be living off takeout. But there are other ways that busy working adults can save some time attending to the necessary tasks in life like feeding ourselves and keeping our living spaces tidy. Hire a cleaning service to swing by once a week. Or sign up for a meal delivery service to save yourself a trip to the grocery store. Reclaim your weekend and hire someone else to handle the lawn.

When it comes to your day-to-day tasks, why not use an automated bill pay system to set up scheduled accounts payable on behalf of your clients? The work still gets done, but it releases you from the burden of manual bill pay. Feel a twinge of guilt in taking the “easy” way out? There’s no need. That’s what technology is for! Use it.

Multitasking can be your friend

Some people think multitasking is the bane of our modern existence, but don’t write it off completely. There might be some value in it for you. For example, let’s say you’re approaching month-end close and know you’ll be extra short on time in the days ahead. Instead of trying to squeeze in a session at the gym AND letting your dog out into the back yard when you get home, go for a brisk walk through your neighborhood with your dog. That knocks out the workout and the pet care at the same time. And that’s an extra hour you can sleep rather than spending it at the gym.

Think efficiency here: what other things do you have on your to-do list that could be consolidated together? Batch payments instead of single payments. Syncing A/P to your accounting software. All those minutes saved start to add up.

Consider a time management tool

This one’s tough because no one wants to admit that they’re wasting time. But I bet if you sat down and mapped out your entire day, you’d realize there are periods — however short they might be — where you could have better used your time. No one’s saying to eliminate wasted time completely. You can still invest as much free time as you like into bad reality TV, arguing with strangers on social media, or whatever else you enjoy.

However, a time management app might help you see that perhaps if you spent just a little less time scrolling Instagram, you could free up some time for more important things like sleep and self care. Maybe even responding to that email your old friend from college sent you three weeks ago, that you keep meaning to respond to. Just try tracking your time for a week and see how many hours you could claw back from less productive pursuits.

Declutter your life

The Marie Kondo method is all the rage these days but you don’t need to go through every item in your house, piece-by-piece, to weed out everything that doesn’t “spark joy” in order to declutter. For those of us whose joy is a little too easy to spark (you know who you are), clearing out some of the clutter can lead to a more efficient life and free up some time that you previously spent trying to track down that stapler that you just know you had. Give away the kitchen gadgets you never use, organize that messy desk of yours, and file papers away so you aren’t spending more time than you have on trying to find the things you need. A little time investment upfront will pay off in the long run. This also goes for digital declutter — unsubscribing from marketing emails and organizing your files both at work and home can help you find things faster and therefore free up precious time.

Oh, and one last piece of advice …

Put automation to work at the office

One Melio client increased their overall revenue by 30% and estimated that they save two hours every day using Melio to automate paying bills and receiving payments. Once payments come in, they’re seamlessly synced to your accounting software, saving even more time and trouble. Imagine what you could do with two hours a day. Two hours that aren’t spent waiting around for checks and chasing down clients. That’s one less thing to worry about, and surely we all need less to worry about these days.

These time-saving tips are brought to you by Melio, your partners in workflow efficiency. Save time and trouble with Melio’s full suite of A/R and A/P solutions.

The post 4 Ways to Automate Your Day and Free Up Precious Time appeared first on Going Concern.

Malaysia says auditor KPMG to pay $80 million in 1MDB settlement [Reuters] Malaysia said on Thursday audit firm KPMG has agreed to pay a 333 million ringgit ($80.11 million) settlement to resolve all claims related to their fiduciary duties on auditing of 1Malaysia Development Berhad (1MDB) accounts from 2010 to 2012.

PwC reports disability and socio-economic pay gaps [Personnel Today] PwC has published comprehensive pay gap data relating to gender, ethnicity and, for the first time, socio-economic background and disability. The accounting giant’s 2021 diversity report found that its staff – including partners – from a working class background typically received 12.1% less pay than other colleagues. Kevin Ellis, chairman and senior partner of PwC UK, said the time was right to expand on the data it publishes. “Improving access to opportunity and striving towards a society where a person’s career is based on their potential and not their background remains a priority for PwC, and for me personally,” he said. “The key to enacting real and meaningful change is starting with a strong platform of data. We’ve been focused on social mobility for a number of years and, by putting their trust in us through sharing their data, our people are giving us the information we need to take action in areas where it is needed.” [Ed. note: here is the PwC diversity report]

Early Black-owned CPA firms spurred diversity efforts [Journal of Accountancy] Firms established by pioneering Black CPAs decades ago created an indelible legacy within the accounting profession. Built by Black CPAs who succeeded despite adversity, the firms continue to play an important role in the profession’s recruitment and advancement initiatives, and with the clients they serve. Here are a few examples.

Deloitte places largest Mini Electric order in Europe so far [electrive.com] At Deloitte Belgium, the branch that placed the order, one in four new employees opted for an electric company car since June, the firm reports. It ordered another 140 Mini Cooper SE from BMW to meet this demand, bringing the electric Mini fleet to 240. BMW points out that the “eye-catching” green rear-view mirrors in Deloitte colour are particularly popular with new employees.

How Clients’ Expectations of CPAs are Evolving [AccountingWEB] Sage’s recent “Practice of Now” report, which surveyed more than 3,200 accountants around the globe, found that 82 percent of respondents say their clients’ expectations have widened to include the provision of business advice. Simply put, the days of CPAs thriving simply as trusted number crunchers are over. The Society says companies and clients will need and expect their CPAs to proactively provide strategic guidance and insights in all areas of their business based on their unique needs and goals.

BDO hires record number of new trainees to its audit team [City A.M.] The hiring flurry into its audit team follows a damning report by the Financial Reporting Council (FRC) in July which found that a third of large company audits fell short of

FASB Gives Interest-Rate Relief to Private Companies, Nonprofits Renting Assets [Wall Street Journal] The move approved by the U.S. accounting standard setter on Wednesday is aimed at reducing the costs associated with implementing a new leasing standard. The rule, called Topic 842, requires businesses to put operating leases on their balance sheets—instead of in footnote disclosures—and is set to go into effect for private companies and nonprofits early next year.

The post Friday Footnotes: PwC Pays the Poors Less; Deloitte’s New Minis; BDO Brings on Audit Staff | 9.17.21 appeared first on Going Concern.

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