Questions to Consider

What is your objective for each client?

Every CPA might have varying methods, but the main aim should always be to offer the finest financial recommendations and tactics customized to each client’s distinct circumstances.

Do you give precedence to reducing taxes or lowering the risk of an audit?

Both are important, but understanding your CPA’s stance can provide a glimpse into their strategy.

Which is preferable, paying $1M in taxes or $100k in taxes?

This may appear to be a deceptive question, but it’s about viewpoint. A tax payment of $1M might suggest that you’ve garnered a lot more, which could be seen as a good thing.

What is your plan for each client?

The answer should be to boost productivity. A CPA should consistently seek ways to improve your fiscal productivity, ensuring every cent is to your advantage.

Is your CPA liaising with any members of my team without my knowledge?

If your CPA is communicating without your awareness, it’s vital to set boundaries and insist on transparency.

How do you keep abreast of new tax laws and opportunities for your clientele?

Tax regulations are in constant flux. Your CPA should be forward-thinking in staying informed to offer the best guidance.

Do you collaborate with tax lawyers or cost segregation specialists?

The ideal answer is yes. Teaming up with professionals in related sectors can provide a more all-encompassing financial strategy.

How frequently do you suggest we convene?

The best response is more than once and not just during tax season. Periodic meetings can preemptively tackle potential issues.

Is your approach cautious, or will you exploit tax legislation to our utmost benefit?

They should harness the tax code to lawfully minimize taxes as much as feasible without being recklessly aggressive or overly cautious.

Can you share some unique tax-saving strategies you’ve introduced to other clients?

This query can shed light on their inventiveness and commitment to delivering value.

Additional Questions

• What’s the most effective tax shelter? The ideal answer is earning another dollar.
• Would you opt to pay 1 million or 10 million in tax? The best response is 10 million, as it indicates you earned a higher income.
• What’s your stance on postponing tax, and when is it prudent to delay taxes? The best response is that postponing tax is the least beneficial method to “save” on tax since taxes are probably escalating.
• When’s the right time to begin tax planning for my business exit? The best answer is immediately.
• What are the potential pitfalls of IRAs or defined benefit schemes?

To wrap up, posing the correct queries can significantly impact your financial trajectory. It’s essential that your CPA is not just knowledgeable but also proactive in offering the best strategies tailored to your requirements.

Stay connected to our blog for more financial insights and advice. You can follow us on LinkedIn or learn more by visiting our features page to see how Reach Reporting is changing lives for business owners, CPAs, advisors, bookkeepers and financial managers.

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The New Standard

Previously, there were no specific accounting or disclosure rules for crypto assets in the U.S., with businesses classifying them as indefinite-lived intangible assets akin to intellectual property such as copyrights. This classification required companies to review the value of such assets annually, writing it down if it dropped below the purchase price. 

The newly adopted standard mandates businesses apply fair-value accounting to bitcoin and certain other crypto assets. This change will allow them to immediately recognize losses and gains and treat digital assets similarly to some financial assets instead of as indefinite-lived intangible assets.

Implications for Different Sectors

Public and Private Companies:

• Public companies will need to disclose their crypto assets separately from intangible assets like patents and trademarks in their quarterly and annual financial statements.
• Private companies are required to follow suit in their financial reports, including gains and losses on crypto assets in their net income.
• The rule is slated to be effective from the 2025 annual reports, with companies having the option to adopt the changes earlier.

Regulatory Environment:

• The crypto industry has faced several hurdles recently, including regulatory crackdowns and a significant drop in Bitcoin’s price since its peak in November 2021.
• Despite the challenges, ownership of cryptocurrencies continues to rise, albeit few new companies have ventured into holding crypto due to its volatile nature and the lack of clear rules.

Concerns and Feedback from Industry Giants:

• Companies like Block and MicroStrategy have expressed concerns over disclosing information on cryptographic private keys, emphasizing the sufficiency of the current risk factors mentioned in their financial statements.
• There is a consensus among many firms that the proposed rule is a step in the right direction, with widespread support for the change.

Exclusions and Controversies

The FASB has chosen to exclude assets with “enforceable rights” from the new requirements, a decision that has sparked debates and calls for clarity. This exclusion pertains to assets that have contractual rights to cash flows or ownership of goods or services, including non-fungible tokens (NFTs) and certain stablecoins.

Companies like BlockFi have urged the FASB to remove the term “enforceable rights” from the proposed rule, fearing it could undermine the core purpose of the standard. Despite the concerns, the FASB has opted to retain the term, citing the need to avoid slowing down the project with further research.

Positive Reactions

Increased Transparency

Many stakeholders would appreciate the increased transparency in financial reporting, which would allow for a more accurate assessment of a company’s financial health.

Better Regulation

The crypto industry, which has long operated in a somewhat gray area, would benefit from clearer regulations, potentially attracting more conservative investors and encouraging new companies to hold crypto assets.

Cost Savings

As noted by FASB Vice Chair Jim Kroeker, the rule could lead to cost savings in some cases, which would be a welcome development for many companies.

Support from Industry Giants

Companies like MicroStrategy have expressed support for the change, noting the potential for crypto assets to become a mainstream treasury reserve asset option in the future.

Negative Reactions

Security Concerns

Companies like Block have raised security concerns, particularly regarding the disclosure of information on cryptographic private keys, arguing that such disclosures would not be useful to readers and could potentially pose security risks.

Exclusion of Certain Assets

The exclusion of assets with “enforceable rights” from the new requirements has been met with criticism, with some stakeholders calling for the removal of this term from the rule to avoid undermining its core purpose.

Increased Complexity

The new rule could potentially increase the complexity of financial reporting, requiring companies to conduct additional analyses and use more judgment, especially in determining the fair value of crypto assets.

Concerns Over Early Adoption

While companies have the option to adopt the changes early, this could potentially lead to inconsistencies in financial reporting across different companies, as some might choose to adopt the new standards earlier than others.

Conclusion

The FASB’s new rule on crypto accounting and disclosure is a monumental step towards bringing clarity and standardization to the rapidly evolving crypto space. While the rule has been welcomed by many, it also opens up a series of discussions on the exclusions and the need for further clarity in the standard. 

It marks a significant step towards standardization and transparency and at the same time raises concerns over security and the exclusion of certain assets from the requirements. It remains to be seen how companies and the wider industry will navigate these changes, and whether the rule will undergo further revisions in response to the feedback from various stakeholders.

As the crypto landscape continues to evolve, it is imperative for companies and investors to stay abreast of these changes to navigate the complex world of crypto assets effectively. The new rule promises not only to streamline accounting practices but also to foster transparency and potentially spur cost savings for companies. It marks a pivotal moment in crypto regulation, setting a precedent for the integration of digital assets into the mainstream financial reporting landscape.

The post Crypto Standards CPAs Should Know appeared first on Reach Reporting.

The New Rates

The IRS has set the following rates for the upcoming calendar quarter:

• Individuals: 8% per year (compounded daily) for both overpayments and underpayments.
• Corporations: 7% for overpayments and 8% for underpayments. However, there’s a 5.5% rate for the portion of a corporate overpayment that exceeds $10,000 and a 10% rate for large corporate underpayments.

These rates are determined based on the federal short-term rate, which is adjusted quarterly. For most taxpayers, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Corporations have a slightly different calculation, with the underpayment rate being the federal short-term rate plus 3 percentage points and the overpayment rate being the federal short-term rate plus 2 percentage points. Large corporate underpayments have an added rate of the federal short-term rate plus 5 percentage points.

Implications for Different Sectors

Small Businesses

• • Small businesses that have made an overpayment, as defined by the IRS, can expect a return at an 8% interest rate. This could be beneficial for businesses that have made excess payments.
  • On the flip side, businesses that have underpaid will face an 8% interest rate, which could strain their finances if they have significant underpayments.

Corporations

• • Corporations that have made an overpayment, as per the IRS definition, stand to benefit from a 7% interest rate. However, for overpayments exceeding $10,000, the rate drops to 5.5%.
  • Large corporations need to be particularly cautious about underpayments. A hefty 10% interest rate on large corporate underpayments can lead to substantial financial implications.

CPAs and Accountants

• • The new rates mean that CPAs and accountants will need to update their financial models and advise their clients accordingly.
  • It’s crucial for them to ensure that their clients are aware of these changes to avoid any surprises during the tax season.

Individuals

• • For individual taxpayers, the 8% interest rate applies to both overpayments, as defined by the IRS, and underpayments. This means that while they can expect a decent return on overpayments, they should be wary of underpaying their taxes.

Conclusion

The IRS’s decision to hike interest rates is a significant one, and its impact will be felt across the board. Whether you’re an individual taxpayer, a small business owner, or a large corporation, it’s essential to be aware of these changes and plan your finances accordingly. For CPAs and accountants, staying updated with these rates is crucial to provide accurate advice to clients. As always, when in doubt, it’s a good idea to consult with a financial advisor or tax professional to understand the best course of action for your specific situation.

The post How IRS Interest Hikes Affects Businesses appeared first on Reach Reporting.

As a financial professional, you have the power to provide clarity and understanding to your clients through proper financial reporting. Here are some ways to create confidence in your clients by improving your reporting:

Keep Communication Simple

Overcomplicating a financial report can lead to confusion and anxiety for clients. While you don’t want to leave out essential data, you can make the report easy to understand. Visualizing data with dashboards and displaying key performance indicators relevant to your client’s goals can help them make informed decisions.

Avoid Accounting Jargon

To help clients understand the report, you must avoid using complex accounting jargon. Instead, use straightforward language that is professional and easy to understand. Speak in layman’s terms, and remember to explain any technical terms that clients may not be familiar with.

Be Available and Approachable

Communication is essential for building trust with your clients. It is also critical to teach your clients how to read the financial reports that you provide. Explain the relevance of each KPI to their everyday decisions. By doing this, you will be teaching your clients how to fish and helping them make informed decisions.

Provide Correct Data

Providing incorrect data can shake a client’s confidence faster than anything else. It is imperative to ensure the data you provide is accurate. Mistakes can occur when using spreadsheets, with one small error having a domino effect, leading to significant problems.

According to Forbes, almost nine out of 10 spreadsheets (88%) contain errors, the majority of which are human error. Reach Reporting provides an automated solution that reduces the risk of errors in financial reports. You can create a report once, save it, and it will be auto-populated the next time, saving you time and reducing the possibility of errors.

Final Thoughts

It is essential to give your clients the confidence to make informed financial decisions. By keeping your financial reports simple, avoiding jargon, maintaining open communication, and providing correct data, you can help your clients achieve their goals. By working hand-in-hand with your clients, you can become a vital partner in their financial journey. Reach Reporting offers a tool to streamline the financial reporting process, reducing errors and increasing efficiency.

The post How to Improve Client Confidence appeared first on Reach Reporting.

Why Create Advisory Reports?

Powerful reports help you communicate effectively with clients about their financial data. Reach Reporting was created with accounting professionals in mind, to help you showcase your expertise and make the reporting process simple and pain-free.

We know that you have a lot to offer your clients, but communicating financial data in a way that they can easily understand can be challenging. Reach Reporting simplifies this process, giving you the tools you need to create beautiful, informative, and understandable company financial reports.

How to Build a Financial Report

At Reach Reporting, we’ve simplified the process of building a financial report into three simple steps: Connect, Select, and Share.

First, connect your client’s data from QuickBooks Online and Desktop, Xero, Data Sheets, and Google Sheets. Then, select from our professional, pre-designed report templates or work from a blank canvas to customize your reports.

Finally, share your reports with your clients using our various sharing options, including the Publish feature that sends a link to your client. The link is always up-to-date and can be accessed anywhere, making it easy for your clients to share with other decision-makers.

Final Thoughts

Transform your financial reports with Reach Reporting and showcase yourself as a financial advisory professional. With our software, you can create powerful reports that will make you irreplaceable to your clients and set you apart from your competitors. Try Reach Reporting today with our free 14-day trial and experience the power of simplified financial reporting.

If you want to set yourself apart in the accounting industry and become a valuable asset to your clients, it’s time to take your financial reporting to the next level with Reach Reporting. With our powerful reports, you can communicate financial data effectively to your clients, making you an essential part of their company. And don’t forget about the power of budgeting and forecasting! With Reach Reporting’s forecasting and budgeting tools, you can provide even more valuable insights to your clients and help them plan for a successful financial future. So, what are you waiting for? Try Reach Reporting today and take the first step towards becoming a financial advisory professional with a comprehensive suite of tools to help you succeed.

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