Each day I talk to business leaders about what they like best – and least – about their Certified Public Accountants (CPAs). The responses range from, “I won’t buy a mobile phone without checking with Mary,” to “Mark is okay, but he likes my rival football team and that’s unacceptable.”

Clearly, there are many factors that can solidify or dissolve a relationship with a trusted advisor such as your CPA. Some, while not preferred, are tolerable; others are absolute deal breakers. Still, the services of a CPA are crucial to the success of any company. That’s why you should ask yourself these five questions to determine if your CPA is meeting your needs, or it’s time to move on to someone else.

Does my CPA understand my business and industry?

As the business development manager of a “Top 50” accounting and wealth management firm, I hear the term “generalist” quite often. In the accounting world, the label applies to a professional with clients in multiple industries. Traditionally, a CPA’s role was to have a working knowledge of each of their clients’ industries. Today, top firms specialize in precise areas of focus to ensure they are experts in the tax laws that govern their clients’ industries. For example, if you own a construction company and the only construction company your CPA works with is your own, are you certain you are taking advantage of every potential tax benefit and functional process available to streamline and grow your operations?

Am I getting the value I deserve?

Value has different meanings for different people. Accounting value is leverageable by:

• Knowing your CPA is always there when you have questions
• Trusting your CPA is current with the ever-changing tax laws that govern business owners
• Counting on your CPA to complete important tasks on time

Value is essentially whatever you perceive it to be. Knowing what is important to you and your business will help you identify problems when your expectations of value are not being met. Make sure you can define “value” when working with your CPA, who must be a trusted advisor to be effective.

Have I outgrown my CPA?

You likely have a good relationship with your CPA. He or she has been with you since the beginning, seen your kids grow up, been there through tough times and good. But does that alone ensure he or she is the best partner for your company today? Can he or she guide you through the complex scenarios your business faces? In many cases after a consultation with their CPA of so many years, a business owner realizes the CPA is not only overwhelmed by the company’s growth, but also ill-prepared to help the company capitalize on its success. This is a dangerous place for a business owner.

Am I receiving the level of service I have come to expect from my CPA?

Do you feel like every time you call, your CPA isn’t in, and it takes forever to get a return call? Are you only meeting with your CPA once a year to drop off your tax documents? Have you ever had to write an unexpectedly large check to the IRS without knowing in advance why you owed so much? Think about what services you believe are most valuable to you, then ask yourself, are you receiving the level of service that you expect from your current CPA?

Are accounting services the only services the firm offers?

In today’s world, accounting firms must take a holistic approach to providing added value and top-level financial services. Does Mike from XYZ Tax do your accounting, Mary from the bank your 401k, and Diane from ABC Investments a business succession plan? What if your business could work with one company in a single location for all that? When the left hand knows what the right hand is doing, you gain significant efficiencies. Can you afford to not have all of your trusted business advisors working together, sharing information, and strategizing about your best options?

Having a trusted advisor as your CPA is more than simply hiring someone who belongs to your club or likes the same sports teams you do. It’s about partnering with a reliable professional who is a specialist in your field of business and who will help guide you and your company to the next level of financial success and security.

Regardless of the life cycle stage of your business, awareness of and adherence to the varying and ever-changing state and local tax laws and regulations are critical. The lack of adherence with existing state and local tax laws and regulations, as well as the lack of awareness of coming changes or developments in those SALT rules can cost your business valuable time and money.

A business’ non-compliance with the state and local tax laws and regulations where they do business can result in a significant amount of employees’ time to address and resolve. That time is taken away from running the business.

Non-compliance can also lead to significant costs in the form of unpaid state and local tax liabilities (tax, interest, and penalties), plus professional fees to resolve state and local tax assessments and develop policies/procedures to ensure future compliance.

Whether your business is at the beginning of its life cycle at the start-up stage or near its end looking for a buyer, state and local tax questions may seem to be never-ending:

• What state and local taxes should I be filing?
• In what jurisdictions am I required to file?
• What is economic nexus and does it impact my business?
• How do I properly register and begin to file taxes in new states and localities?
• I hired a remote employee outside of our home state. What are the state and local tax obligations for my business as a result?
• Our business is planning to expand to a new location in another state. What taxes and fees are we responsible for because of this new office?
• Does the hiring of a third-party or independent contractor impact my state and local tax filings?
• We have our hands full enough, how can we get all these additional sales/use tax returns filed accurately and timely?
• We are looking to expand our business through acquisition – what should we be looking for to ensure that we are not also acquiring unpaid state and local tax liabilities?
• I am looking for a buyer for my business and any buyer will be requiring us to allow them to review our returns and records to ensure we do not have material unpaid tax liabilities. How can I ensure that we don’t have material unpaid tax liabilities?
• I just received this letter that we are under audit – our business does not have the time or expertise to ensure that the state properly identifies the true underpayment or overpayment – how can we make this happen?
• Our business just received this notice for payment of taxes, should I just pay it and hope the state goes away?
• Our competitor received incentives and credits from the state and local government, why didn’t our accountant do that for us?
• What is unclaimed property, and do I have to deal with this?

There are so many businesses that have unanswered state and local tax questions throughout their life cycles. HBK SALT, with its years of experience and expertise, has the answers to your state and local questions and can serve as your trusted SALT advisor throughout the life cycles of your business.

Read more on HBK’s SALT practice and our capabilities or contact us at HBKSalt@hbkcpa.com with questions.

As the result of recent legislation (Senate Bill 3), the Texas Comptroller’s Office has announced changes to the franchise tax filing requirements. Effective for franchise tax reports originally due on or after January 1, 2024, the no-tax due revenue threshold is increased to $2.47 million from $1.23 million. The no-tax-due report will be discontinued starting with the 2024 report year. Taxable entities below the revenue threshold are no longer required to file a no-tax-due report.

Taxable entities below the revenue threshold are required to file a Public Information Report (PIR) or Ownership Information Report (OIR). Passive entities, real estate investment trusts (REITs), and taxable entities with zero Texas receipts must submit either a long form or an EZ Computation form. New veteran-owned businesses are exempt from filing a Public Information Report or Ownership Information Report throughout the five-year exemption period.

Combined groups are still required to include all taxable entities even when a member is below the no-tax-due threshold. If the combined group is below the threshold, there is no longer a requirement to file a franchise tax report. If the members of the combined group are organized in Texas or have a nexus with the state, a PIR or OIR must be filed.

The full announcement from the Comptroller can be viewed here

If you have questions on the Texas update or other SALT matters, please contact HBK’s SALT Advisory Group at hbksalt@hbkcpa.com.

The beginning of a new year can bring excitement and a renewed sense of purpose. Resolutions are often made as many of us reflect on the past and contemplate positive changes we can make in the future. This is especially true when it comes to your financial well-being. According to a recent study by Bankrate, close to 90% of Americans have set a financial goal for 2024.

While making resolutions is easy, keeping them is hard. Research has shown that as many as 80% of people fail to keep their New Year’s resolutions by February and only 8% manage to keep them the entire year. Making a change requires more than merely motivation. Experts say that to truly make a change that is meaningful and lasting, you need a specific goal, determination, an eagerness to learn, balanced with a practical approach and a well-thought-out method for enacting the change. Successful change also happens when you have someone guiding you and helping keep you accountable.

To help guide you to a financially successful 2024, here are ten tips for planning financial goals, collecting tax data, and ensuring a prosperous start to the new year.

1. Reflect on the Past Year: Before diving into setting new financial goals, take a moment to reflect on the past year. Evaluate your financial successes and challenges. Did you save what you intended? Are you satisfied with the direction of your portfolio? Were there unexpected expenses that caught you by surprise? Reflecting on the past can provide valuable insight and focus as you set your resolutions for the new year.
2. Set Goals For Your Specific Needs: Write down specific, measurable goals for the new year. Your goals should align with your unique situation. Whether it’s optimizing investment returns, diversifying assets, paying off debt, or expanding philanthropic endeavors, knowing what you specifically want and mapping out how you can get there is paramount. Work with your advisors to identify targets and deadlines to plan cash flow needs throughout the year. As an example, if you expect to receive stock options or supplemental retirement benefits, know how to maximize their benefit and know what deadlines exist for the coming year.
3. Engage with Financial Professionals: Experienced, licensed professionals can help elevate your plans and ensure you are using all means necessary to achieve your goals. Collaborate with your financial and tax advisors to ensure that you are getting the most from their experience. Discussing your goals with your advisors can uncover opportunities for tax optimization, risk management, and strategic investment planning. Be proactive and schedule time to meet with your financial advisors. Depending on your needs, you may need to meet with your advisor annually, bi-annually, or quarterly. Having regularly scheduled meetings provides the expert guidance and accountability needed for long-term financial success.
4. Strategic Tax Planning: More complex portfolios can introduce more intricate tax scenarios. Engage with tax professionals early in the year to proactively plan for tax liabilities. Explore strategies such as tax-efficient investments, charitable giving, and estate planning to optimize your overall tax position. Identify whether you will need to extend your tax returns or file in the spring. Work with your advisors to make sure that you are up-to-date on changing tax laws and how they impact your plans.
5. Collect Tax Data Early: Don’t wait until the last minute to gather tax-related documents. Start collecting W-2s, 1099s, and other necessary documents early in the year. This proactive approach can help you avoid the stress of a last-minute scramble and may allow you to identify potential deductions or credits.
6. Evaluate and Adjust Estate Plans: Estate planning is significant for individuals to safeguard assets and facilitate smooth wealth transfer. Review your estate plan regularly, especially before and after significant life events, changes in laws, or changes in financial circumstances. Work with your advisors to ensure your plan aligns with current laws and reflects your wishes regarding wealth distribution. Experienced financial and tax advisors work with you to make a tailored estate plan that best protects your interests and achieves your goals. Review beneficiaries, especially if you’ve recently experienced any significant life events, such as marriage, having children, divorce, or death.
7. Review Charity Plans: Philanthropy can be a meaningful aspect of financial planning. Consider refining your philanthropic goals, exploring impact investing, and establishing a structured approach to charitable giving. Engaging in philanthropy with a strategic mindset can amplify the positive impact of your contributions.
8. Review Tax-Efficient Strategies: Take advantage of tax-efficient strategies to minimize your tax liability. Contribute to retirement accounts such as 401(k)s or IRAs, as these contributions may be tax-deductible. Familiarize yourself with available tax credits and deductions to ensure you’re maximizing your savings.
9. Stay Informed About Market Trends: Work with advisors who will help to keep you abreast of market trends and economic developments that may impact your wealth. Staying informed about global markets, geopolitical events, and emerging investment opportunities will allow you to track your goals with your advisors. Work proactively with your advisors to regularly review your investment strategy in light of the evolving financial landscape. Experienced advisors can offer solutions and plans to manage your potential exposure to changing markets. Risk management, including insurance planning and alternative investments can be complex and experienced advisors can assist with developing a plan specific to your needs.
10. Don’t Just Set and Forget: Plan to revisit your goals throughout the year and work with your advisors to ensure you are on track to meet your goals. Be mindful of your circumstances and check in with your advisors if something unexpected occurs that may impact your plans.
11.  

Instead of resolving to do better, work with your financial advisor to craft a financial strategy that extends beyond traditional savings and investment goals to include tax optimization, diversified investments, estate planning, and philanthropy. By making this change, you’ll set the stage for a prosperous and secure financial future in 2024 and beyond.

In the realm of philanthropy and tax planning, donor-advised funds (DAFs) have emerged as powerful tools for individuals and families seeking to create a meaningful legacy while optimizing their financial and tax strategies. DAFs provide a flexible and tax-efficient way to contribute to charitable causes, allowing donors to manage their giving and capitalize on the associated tax benefits.

A donor-advised fund is a charitable vehicle that allows individuals to earmark cash or non-cash assets for future charitable endeavors and receive immediate tax benefits, as well as to direct grants to their favorite charities over a period of time. These funds are typically managed by sponsoring organizations, such as community foundations or financial institutions, providing donors with a hassle-free and cost-effective way to organize their charitable giving.

Tax benefits

Donor-advised funds offer donors multiple tax benefits:

• Immediate tax deductions: One of the primary advantages of using a DAF is that the tax deduction is available when you make the contribution. Your contribution is considered a charitable contribution and reported as an itemized deduction. This deduction can be particularly beneficial for someone with substantial earnings in a year, helping to offset their taxable income.
• Capital gains tax avoidance: Donating appreciated non-cash assets to a DAF, such as stocks or real estate, can be a savvy tax planning move providing a two-fold tax benefit. By contributing assets such as stock or real estate, donors receive both a deduction for the fair market value (FMV) of the assets and avoid recognition of capital gain income that would have been required if the non-cash assets were sold instead of donated.
• Flexibility in grant-making: Even though the donor receives an immediate tax benefit, the DAF allows distribution of the donated assets from the fund to qualified charities over time. In other words, you can contribute assets to a DAF, receive a charitable donation tax deduction, and then decide which qualified charities receive the funds at a later time. This allows for strategic and intentional giving aligning with the donor’s values and priorities.
• Estate tax planning: DAFs can play an important role in estate planning by allowing donors to remove assets from their taxable estate. The DAF also allows the donor to designate a successor fund advisor or fund beneficiaries which ensures the fund can continue to support charitable causes even after the donor’s passing, potentially reducing estate taxes and leaving a lasting legacy.

As such, a DAF can be a helpful and important tool in the tax planning toolbelt. The following strategies only scratch the surface of how a DAF can be integrated into your annual tax planning strategies:

• Bunching contributions: Bunching contributions involves consolidating several years of charitable giving into a single tax year. By contributing to a DAF in a high-income year, donors can maximize their tax deductions, potentially surpassing the standard deduction threshold and then some.
• Tax bracket optimization: DAFs provide an opportunity to optimize tax brackets by strategically timing contributions and amounts. Donors can leverage DAFs to “smooth out” income spikes, staying within lower tax brackets and minimizing their overall tax liability. Working closely with a tax advisor can ensure the amount being contributed to a DAF in any year supports the donor’s tax strategies in a precise manner.
• Strategic asset contributions: As previously mentioned, donating appreciated assets to a DAF allows donors to avoid capital gains taxes. This strategy can be particularly advantageous when rebalancing investment portfolios or divesting assets with significant appreciation. This strategy can also be integrated, working in parallel with a donor’s estate plan by removing highly appreciated assets from the donor’s taxable estate and ensuring future appreciation occurs outside the donor’s estate.

In conclusion, donor-advised funds offer a dynamic and tax-efficient solution for individuals and families seeking to align their charitable giving with their financial goals. By leveraging the immediate tax benefits, avoiding capital gains taxes, and strategically planning contributions, donors can make a lasting impact on the causes they care about while optimizing their overall financial strategy. As always, it is advisable to consult with your financial advisor and tax professional to tailor your DAF strategy to your circumstances and goals.

Despite many Ohio manufacturers experiencing a successful 2023, finding and retaining skilled labor remains a challenge for many organizations. According to the Ohio Department of Job and Family Services, Ohio’s unemployment rate was 3.6% in both October and November, the latest months for which data is available. Further, manufacturing continues to have modest job gains in the state, and average hourly earnings have exceeded $31.00 per hour in the last two months. As a result, competition for employees remains high, and employers must look for opportunities to set them apart from their competition.

One way for employers to differentiate themselves is to offer upskilling opportunities to current or prospective employees. Employers with a physical location and W-2 employees in Ohio may apply for Ohio TechCred to obtain valuable funding to help with employee training and upskilling.

The program provides six steps for employers to follow:

1. Employers should identify the skills that they want employees to develop, and the employer should identify employees who can develop these skills. TechCred will help the employer fund training for employees to develop the skills identified.
2. Employers should identify their preferred provider for the certificate or certification that the employee will earn. The certificate or certification must be industry-recognized, technology-focused, and short-term (meaning that the employee can earn it in less than 12 months or fewer than 900 clock hours or 30 credit hours). Universities, community colleges, technical centers, and private training centers may be eligible training providers as long as they are not affiliated with the employer applying.
3. Employers must apply online at https://techcred.ohio.gov/apply. The current application period will close on January 31, 2024, at 3:00 PM. The Ohio Department of Development will score applications and award funding. Considerations for applications include the level of economic distress in the applicant’s region, the balance of awards provided to the region, and the amount that an employer is contributing towards the certificate or certification.
4. If employees have not already enrolled, enroll them in the program. Note that training must be started on or after December 1, 2023, to qualify for the current application period.
5. After the credential or certificate is earned, an employer must upload it to https://ohid.ohio.gov/wps/portal/gov/ohid/login to begin the reimbursement process.
   Employers will need to log in using their OH|ID. Employers must provide a copy of the certificate or certification earned, an itemized invoice that identifies the cost, and proof of payment (such as a cleared check, credit card statement, or bank statement) that identifies the training provider, the amount paid, and the date paid. Employers must also submit information about the employee who earned the credential as well as the TechCred’s employment verification form.
6. Employers will receive reimbursement of up to $2,000 per credential and up to $30,000 per funding round.

Interested employers should review the eligibility criteria for employers, employees, credentials, and training providers provided at https://techcred.ohio.gov/. For more information about this program or to learn about other resources that may help your manufacturing business, contact a member of HBK Manufacturing Solutions at manufacturing@hbkcpa.com or 330-758-8613.

As of your 2023 tax year, if you have ten or more information returns (IRS Form 1099 filed in January 2024), they must be filed electronically with the Internal Revenue Service (IRS). The rule applies to businesses that file directly with the IRS. The new Information Returns Intake System (IRIS) will also allow you to file corrections and request extensions for Form 1099.

The IRIS system is an alternative to the Filing Information Returns Electronically (FIRE) system, which requires a dedicated software program. The IRIS system is particularly useful for small and mid-size companies filing on the IRS system, although large businesses, tax-exempt organizations, third-party filers, government agencies, and individuals may also use IRIS.

To get started with the IRIS portal, you need an IRIS Transmitter Control Code (TCC), a five-digit code that identifies the taxpayer when e-filing the forms. The TCC is only used for IRIS. Each individual listed as an authorized user must have an account. The authorized user will need to create an ID.me account if they don’t already have one.

You will need the following information to complete a new IRIS Application for TCC:

• • Your firm or organization’s Employer Identification Number (EIN).
  • Your firm or organization’s legal business name, business type, physical and mailing addresses, and phone numbers.

Note: The firm or organization’s doing business as (DBA) name is needed if different than the legal business name.

• Information about Responsible Officials (RO), minimum of two; Authorized Delegate (AD), minimum zero and maximum of 2; and Contacts, minimum of two and maximum of 50.

Exception: If you are a ‘Sole Proprietorship’ or ‘Single Member Limited Liability Company’ business structure, a minimum of one RO and Contact is required.

• Form(s) you will be filing.
• Transmission method(s) you will use.

For each authorized user listed on the application, you will need their:

• Taxpayer Identification Number – Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Date of birth (DOB) and U.S. Citizenship

• Contact information including e-mail address, title, phone number
• Role(s) of your firm/organization

The IRS will review your application information and provide a written confirmation of your acceptance or rejection into the program. Processing times may vary; however, typically, an application will be processed within 45 business days.

To access the IRIS Application for TCC, click the “Access IRIS Application for TCC” option and create a new account or sign in with an existing account. Once you obtain your TCC, you can e-file Forms 1099 with IRIS. If you use the IRIS system to file the Form 1099, you do not need to file the transmittal Form 1096, “Annual Summary and Transmittal of U.S. Information Returns.”

You can e-file any Form 1099 with IRIS in 2024.

Forms 1099

• Form 1099-A, Acquisition or Abandonment of Secured Property
• Form 1099-B, Proceeds from Broker and Barter Exchange Transactions
• Form 1099-C, Cancellation of Debt
• Form 1099-CAP, Changes in Corporate Control and Capital Structure
• Form 1099-DIV, Dividends and Distributions
• Form 1099-G, Certain Government Payments
• Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments
• Form 1099-INT, Interest Income
• Form 1099-K, Payment Card and Third-Party Network Transactions
• Form 1099-LS, Reportable Life Insurance Sale
• Form 1099-LTC, Long-Term Care and Accelerated Death Benefits
• Form 1099-MISC, Miscellaneous Income
• Form 1099-NEC, Nonemployee Compensation
• Form 1099-OID, Original Issue Discount
• Form 1099-PATR, Taxable Distributions Received from Cooperatives
• Form 1099-Q, Payments from Qualified Education Programs (Under Sections 529 and 530)
• Form 1099-QA, Distributions from ABLE Accounts
• Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
• Form 1099-S, Proceeds from Real Estate Transactions
• Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA
• Form 1099-SB, Seller’s Investment in Life Insurance Contract

Remember that most 2023 1099s are due to the recipient by January 31, 2024.

Internal Revenue Service due dates, except as indicated below, require you to file paper Forms 1099 by February 28, 2024, or April 1, 2024, if filing electronically. Form 1096 must accompany all paper submissions. Exceptions include:

• File and furnish a copy of Form 1099-NEC on paper or electronically by January 31, 2024.
• Form 1099-SB is generally due by February 28, 2024, or April 1, 2024, if filing electronically, but see Regulations Section 1.6050Y-3(c) for a special exception.

As we near the end of the year, we are getting increasingly more inquiries about the information required for filing 2023 returns and the tax law changes that will impact those returns. The following information is in response to some of the more common concerns:

Expired Tax Provisions

A number of tax provisions impacting business returns have expiration dates:

• 100% Bonus Depreciation Phase-Out: The Tax Cuts and Jobs Act allowed for a 100 percent bonus depreciation deduction for qualifying assets placed in service, such as furniture, equipment, and vehicles. The bonus percentage decreases by 20 percent per year starting with 2023; it will be completely phased out by 2027, meaning that for assets placed in service between January 1, 2023 and December 31, 2023, 80 percent bonus depreciation is allowed. The phase-out period doesn’t begin until 2024 for certain property with a long production period.
• 100% Deduction for Restaurant Business Meal Expenses: The full amount allowed for deduction in 2021 and 2022 for certain business meals provided by restaurants expired on January 1, 2023. In 2023, a business can deduct only 50 percent of the cost of business meals.

Other provisions that may impact your business return include:

• The Employee Retention Credit is no longer active, but retroactive credits may be claimed on amended payroll tax returns.
• Research and development expenditures can no longer be expensed, and instead must be amortized under IRC § 174.
• Depreciation, amortization, and depletion do not get added back to the calculation of adjusted taxable income for the limit on business interest expense under IRC § 163(j).

Deductions for weather-related losses

Many people and businesses were impacted by severe weather in 2023. Deductions are allowed for three types of losses related to events officially declared by the Federal Emergency Management Agency (FEMA):

• Federal casualty loss: personal losses attributable to a federally declared disaster
• Disaster loss: business or personal losses attributable to a federally declared disaster in an area eligible for assistance pursuant to a presidential declaration; deductible either in the year of the disaster or the preceding year
• Qualified disaster loss: business or personal losses attributable to disasters as specifically identified in legislation passed by Congress

In general, the amount of loss you can deduct is the lesser of the decrease in fair market value of the property and the adjusted basis in the property immediately before the casualty occurred. That loss is then offset by any insurance or other reimbursements you receive. Federal casualty losses and disaster losses may only be deducted to the extent they exceed $100 per casualty and 10 percent of the individual’s adjusted gross income (AGI). Qualified disaster losses are not subject to the 10 percent AGI limitation, but can only be deducted if they exceed $500 per casualty.

Foreign Considerations

As the economy becomes more global, more taxpayer investments include foreign activity. Since noncompliance with the foreign reporting requirements may result in significant penalties, you should carefully review your assets and investments for foreign asset activity that could require special reporting.

In particular, pay attention to the following:

• Foreign bank or brokerage accounts may require reporting if the total value exceeds $10,000.
• Foreign retirement accounts could be treated as foreign trusts requiring additional reporting.
• Investments in foreign partnerships may result in additional reporting under the passive foreign investment company (PFIC) rules.
• Investments in foreign corporations may require additional reporting under the Controlled Foreign Corporation (CFC) rules.
• Beneficiaries of foreign trusts or estates may be subject to additional reporting when distributions are received.
• Gifts or inheritances received from a foreign individual may be subject to additional reporting if the amount received exceeds a certain threshold.

If you are unsure whether an asset, investment, or item of income might be subject to foreign reporting, consult your tax advisor for guidance.

Lowering your taxable income

It is always a good idea to examine ways to lower your taxes, and perhaps even your tax rate, by lowering your taxable income. A couple of opportunities to consider:

• Tax-loss harvesting: Do you have investment losses? They can be used to offset investment gains as well as up to $3,000 of your income. Work with your investment advisor to determine depreciated securities you might sell before the end of 2023.
• Tax-advantaged accounts: Contributions to your 401(k), 403(b), or a health savings account could lower your taxable income as well as provide additional retirement or healthcare assets you can use later. Work with your advisor before year-end to ensure you’re contributing up to the limits allowed.

Tax reporting and compliance grow more complicated each year. Make sure you gather your tax documents carefully and reach out to your tax advisor with any questions or if you are unsure about how certain items could impact your return.

We’re here to help. To talk with an HBK tax professional, call (330) 758-8613.

Two pivotal trends are driving a significant shift on the business landscape: digital transformation and cross-border mergers and acquisitions (M&A). These developments are impactful across the board, but even more so for small business owners and their trusted advisors. As if domestic challenges and a fluid artificial intelligence landscape are not enough to contend with while running their privately owned businesses, owners need to consider how these trends will affect their growth-through-acquisition plans and exit strategies.

Digital transformation and M&A

Digital transformation is here and seasoned business owners and their trusted advisors need to make a concerted effort to keep themselves apprised of the latest developments and how they might affect their businesses. The impact on M&A is undeniable, especially for smaller businesses. It’s not just about embracing the latest technology; it’s about how digital transformation is revolutionizing strategic decision-making, including decisions being contemplated in the M&A space.

Those looking to acquire businesses, whether they are private equity firms, family offices, or strategic acquirers, are increasingly using data analytics, artificial intelligence, and machine learning to help them assess and value potential M&A targets. Today’s business acquirers can scrutinize financials, operations, and market potential with information that is more relevant and accurate than ever before. This data-driven approach helps acquisition teams arrive at more strategically sound and well-supported decisions. A business owner looking to sell will want to use the same data to understand how buyers will assess their business. A seller’s emotional attachment to their business has little if any impact on the value of the business; buyers are increasingly leaning into data-driven analysis.

As well, a digital solution could simplify the post-merger integration process, a critical and often overlooked aspect of negotiating and closing a deal. For instance, cloud-based platforms are streamlining the merger of IT systems, and AI is capable of highlighting operational efficiencies. Using these new resources could significantly reduce the time, complexity, and costs of post-merger integration for all parties.

Cross-border M&A

Another significant trend in the M&A space is the increase in cross-border transactions. We are seeing firsthand how geographical boundaries are becoming less relevant to business expansion. Cross-border M&A can be a significant growth opportunity for business owners looking to move their products and services into new markets. Business owners who feel they have maxed out their domestic market share may be able to materially impact their growth trajectory while at the same time diversifying and managing market risk.

Of course, cross-border M&A presents its own challenges. Dealing with the regulatory frameworks of different countries can be daunting, requiring specialized planning and local know-how. Additionally, merging companies from diverse cultures requires an appreciation of varying corporate cultures, work ethics, and business methodologies. Successful cultural integration hinges on understanding and valuing these differences. This is an area where the services of HBK’s High Performance team can play a significant role in helping to ensure a successful pre-and post-integration process.

The role of digital tools in business acquisition due diligence and valuation, as well as in integrating operations, including IT and human resources, will only continue to increase. Digitization opens doors to growth and expansion. But it also brings unique challenges. Business owners who assemble a transaction team that understands and embraces these technologies can gain a competitive advantage in the M&A space.

For today’s contractors, success is not measured alone by the structures that rise from the ground, but by the precision with which those projects are planned, scheduled, and executed. Contractors must manage projects effectively to be able to navigate the complexities of construction while meeting deadlines and staying within budget constraints.

The following components are essential to effective project management:

Meticulous planning

Meticulous planning lies at the heart of every successful construction project. This initial phase serves as the compass, guiding the entire journey from conception to completion. Key elements of meticulous planning include:

• Project scope definition: Clearly outline the project’s scope, ensuring that all stakeholders have a unified understanding of goals, tasks, and deliverables.
• Risk assessment: Identify potential risks to allow for proactive strategies to mitigate challenges that could surface during the project’s lifespan.
• Resource allocation: Efficient allocation of human capital and material resources is paramount for both cost-effectiveness and optimal project execution.
• Budgeting: Realistic budgeting sets the financial parameters for the project, helping to prevent cost overruns.

Skipping or shortcutting any steps in the planning process will doom a project to failure. Potential issues that could arise without meticulous planning include scope creep; when the scope of a job may become ambiguous leading to contractual disputes, delays, and cost overruns. Contractors must take time at the beginning of the project to ensure they have identified any issues that could be encountered. Once the contract is signed, it can be nearly impossible to renegotiate.

Precise scheduling:

Once the roadmap is established through meticulous planning, the next crucial step is to schedule the project with precision. A well-crafted schedule acts as the project’s heartbeat, ensuring a steady and efficient flow. Key elements of precise scheduling include:

• Critical path analysis: Identify the critical path to allow project managers to focus on tasks that directly impact the overall project timeline.
• Task sequencing: Establish a logical sequence for tasks to prevent bottlenecks and ensure a smooth progression of the project.
• Timeline milestones: Set milestones to provide clear markers for progress and help teams stay on track and motivated.
• Flexibility: A good schedule incorporates flexibility to accommodate unforeseen challenges without compromising the project’s overall timeline.

Scheduling is second nature to a contractor, but it is essential to take the time to detail out the schedule to ensure success. Just “thinking” about the schedule and deciding to deal with it as the project progresses will lead to quality issues and safety concerns/job site hazards when rushing to complete a job. This approach is a pathway to a failed project.

Efficient execution:

With the plan and schedule in place, your project can move into the execution phase. Efficient execution is the tangible realization of the project’s goals. Key elements of efficient execution include:

• Communication: Clear and consistent communication among team members, stakeholders, and subcontractors is crucial for a harmonious and efficient workflow.
• Quality control: Implement robust quality control measures to ensure the final product meets or exceeds expectations and reduces the likelihood of rework and delays.
• Monitoring and adjusting: Monitor progress against the schedule regularly to allow for timely adjustments and keep the project on course.
• Problem-solving: Effective project managers excel at identifying and resolving issues promptly, preventing minor setbacks from becoming major roadblocks.

Ineffective execution of effective planning and scheduling results in time delays, cost overruns, and poor subcontractor management leading to reputation damage and fewer future business opportunities. With gross profit deteriorated due to the issues encountered, it might have been better to have not taken on the project in the first place.

Effective project management is not just a strategic advantage; it is the linchpin for success. Ultimately, mastering the key aspects of project management is the gateway to moving as many dollars as possible to the bottom line. If you are interested in HBK Construction Solutions meeting with your project managers to discuss these matters and their financial impacts, please contact one of our offices to speak with a member of our Construction Solutions team. HBK Construction Solutions is a team of CPAs within HBK CPAs & Consultants dedicated to providing construction companies with strategies and solutions to address the financial issues unique to their industry. Our more than 60 specialists, including Certified Construction Industry Financial Professionals, serve more than 600 construction businesses, including general contractors, infrastructure and heavy construction firms, homebuilders, and specialty trades.