Sousa and Company

If running a business is like going on a road trip, then a full set of pro forma financials is your road map or GPS app. Projected balance sheets, income statements and cash flow statements tell investors and lenders 1) where you are, 2) where you want to go, 3) when you’re likely to experience cash flow or capacity shortages, and 4) when you hope to arrive. Moreover, the statement of assumptions explains how you’ll achieve your goals. We can help you prepare pro forma financials, compare expected to actual results and adjust your assumptions as needed. http://bit.ly/2fSL5r8

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A Roth IRA can be a valuable estate planning tool, offering the opportunity for tax-free growth as long as it exists and requiring no distributions during your life, thus allowing you to pass on a greater amount of wealth to your family. If your ability to contribute is phased out based on the applicable income limits, consider converting your traditional IRA into a Roth, effectively turning future tax-deferred potential growth into tax-free potential growth. If you have questions on how a Roth IRA may fit into your estate plan, please get in touch with us.

Where are you going for your next business loan? You should be just as picky with lenders as lenders are with your financials. If you have a long-standing relationship with a bank, call them first. But if you’d like a better offer, or just want to learn what else is out there, shop around. Don’t forget government-backed loan programs or the many alternative financing options available in today’s competitive, high-tech marketplace. We can help you make the right choice, as well as structure and present your financial statements for best results. http://bit.ly/2fSL5r8

What are the three financial statements under U.S. GAAP, and what’s included in each? If you can’t immediately answer these questions, you’re not alone. Many business owners are so focused on building revenue that they don’t have time to regularly monitor the 1) income statement, 2) balance sheet and 3) cash flow statement. But doing so can provide insight into trends that may help you catch potential problems early, and pivot, when needed, to maximize the company’s value. Contact us for a refresher on financial reporting and how to benchmark performance. http://bit.ly/2fSL5r8

Your inventory accounting method can significantly affect your tax bill. If your inventory costs typically rise over time, using the last-in, first-out (LIFO) method, rather than first-in, first-out (FIFO), generally will save tax. By allocating the most recent (and, therefore, higher) costs first, LIFO maximizes cost of goods sold, which minimizes taxable income. But there are additional factors to consider when choosing your inventory accounting method. Contact us for help assessing which method will provide the best fit with your current financial situation. http://bit.ly/2fSL5r8

Who can take the American Opportunity credit? If you have a child in college, you may be eligible to claim the credit (up to $2,500) on your 2016 income tax return. If your income is too high, you won’t qualify. But your child might. There’s a potential downside: You’ll have to forgo your dependency exemption for him or her. And the child can’t take the exemption. But the exemption is also subject to a phaseout, so you might lose its benefit anyway. We can help run the numbers and provide more information about qualifying for the American Opportunity credit. http://bit.ly/2fSL5r8

Are you supporting an elderly parent? You might qualify for the adult-dependent exemption, which allows a deduction of up to $4,050 per adult dependent claimed on your 2016 tax return. For you to qualify, in most cases your parent must have less gross income for the tax year than the exemption amount. Generally Social Security is excluded, but payments from dividends, interest and retirement plans are included. And you must have contributed more than 50% of your parent’s financial support. Contact us for more information on qualifying for this break or others. http://bit.ly/2fSL5r8

There’s still time to make 2016 IRA contributions: The deadline is April 18. If the contribution is deductible, it will lower your 2016 tax bill. But even if it isn’t, a 2016 contribution is likely a good idea. Your money can grow tax-deferred (tax-free in Roth accounts). But annual contributions are limited by law, and any unused limit can’t be carried forward; once the deadline has passed, the savings opportunity is lost forever. The 2016 limit is $5,500 (plus $1,000 for those age 50 or older on Dec. 31, 2016). Want to learn more? Contact us. http://bit.ly/2fSL5r8

It’s a simple question. If my company buys a given asset, will the asset’s benefits be greater than its cost? Some basic ways of finding an answer ignore the time value of money. That’s why it’s better to look to discounted cash flow metrics. For example, net present value measures how much value a capital investment adds to the business. And internal rate of return estimates a single rate of return that summarizes the investment opportunity. We can help you use these and other metrics to make better business decisions. http://bit.ly/2fSL5r8

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If last year your business made repairs to tangible property, such as buildings, equipment or vehicles, you may be eligible for a valuable deduction on your 2016 income tax return. But make sure they were truly repairs, and not actually improvements, which must be depreciated over a period of years. Some IRS safe harbors can help: 1) the routine maintenance safe harbor, 2) the small business safe harbor, or 3) the de minimis safe harbor. Contact us for details on these safe harbors and other ways to maximize your tangible property deductions. http://bit.ly/2fSL5r8

As you file your 2016 return and plan your 2017 charitable giving, keep in mind the available deduction, which will vary based on not only the amount you give, but also factors such as what you give (for example, cash, long-term appreciated stock or tangible personal property), whether your total donations for the year exceed certain income-based limits, whether you receive a benefit from the charity, and even how the charity uses the gift. Other rules and limits also apply. If you have questions about how much you can deduct on your 2016 return, let us know. http://bit.ly/2fSL5r8