March 25, 2014

Creating a Family Limited Partnership

Family Limited Partnerships (FLP) have many benefits with the main goal being to move wealth from one generation to the next. Is this something your family is considering? If so, the first step is to get a team of professionals in place to design the partnership.  At a minimum, this team should include the client, an attorney, a financial advisor and a CPA.  Once the team is in place, you’ll need to meet to determine the financial goals of the client.  Once this is established, the operating agreement should be organized to meet these financial goals.  The proper filings for a Tax Identification Number and Articles of Organization should take place, as well as determining which financial institution to open the FLP account.  Careful consideration should take place to determine which assets will be used to fund the FLP.

There are many advantages for creating a FLP, some include:

  • Assets placed into the limited partnership proved some protection against creditors
  • You may facilitate gifting programs to utilize the annual and lifetime gift tax exclusion
  • Avoids fractionalization of titles
  • Allows shifting of assets to younger generations in the family

Stay tuned to our upcoming post on The Accounting for Family Limited Partnerships.  You can also contact your Anders advisor to determine if a FLP is right for you.

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March 4, 2014

SALT Underpayment and Overpayment More Prevalent Than Companies Think

If you are like most businesses, your energy is spent on product, inventory, employees and trends in your industry.  Sales and Local Tax (SALT) is not one of the items that is top of your mind. Most business owners believe they are in compliance with SALT laws and regulations. It is usually not until the notice about the dreaded audit by the Department of Revenue that they find out differently.

If a company is not in compliance with SALT laws, findings from the audit can result in a hefty drain on cash.  But interestingly enough, sometimes that dreaded audit turns out to be good news as companies pay taxes in error and have substantial unfiled refunds to be claimed.  Both underpayment and overpayment can adversely affect the cash position of a company.

SALT is continually changing due to new laws, new cases and new interpretations, and increasingly difficult to understand, with states taking a much more hands-on approach with stricter compliance measures. By engaging a sales tax review on your company, you can identify potential exposure you may have in the SALT area, and correct underpayment or file to get refunds for taxes paid in error.

If you are the owner of a company that is being audited, be sure to obtain appropriate representation. Representation can substantially reduce audit findings. Implementing proper internal controls can also ensure you are in compliance with the law.

For more information on a SALT review, audit representation or an internal controls assessment, contact you Anders advisor.

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