January 30, 2019

Anders Releases 2018 Community Impact Report

Giving back is part of our social responsibility and corporate culture at Anders, and we proudly support local charitable, civic, community and trade organizations. The Anders Community Impact Report takes an in-depth look at our commitment, connections and involvement in the community in the past year, individually and collectively as a firm.

In 2018, Anders employees gave back to the community by:

  • Volunteering 2,448 hours
  • Sitting on 90 not-for-profit boards
  • Being active members of 159 local organizations
  • Participating in 101 charitable sponsorships
  • Donating over $31,500 to our 2018 Charity of Choice

Read more in the Anders Community Impact Report.

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January 29, 2019

States Changing Tax Rates Due to the Tax Cuts and Jobs Act

The corporate and individual federal tax rates changed under the Tax Cuts and Jobs Act (TCJA), and now states are following suit. Many states have opted to adjust their individual income tax and corporate tax rates for 2018, and some have already adjusted their corporate rates into 2019, 2020 and 2021.

Individual Rate Changes

Individuals filing in states that pose an income tax will want to be aware of how their tax rates have changed.  While some states have flat taxes and others have graduated brackets, all are subject to change. Politics, the economy, and voter preferences are all common factors in rate changes, which enable them to fluctuate frequently. It appears that certain states changed their rates as a result of the TCJA. Below is a snapshot of the individual state tax rates that changed from 2017 to 2018.

individual state tax rates 2017 2018

Corporate Rate Changes

The TCJA reduced the corporate tax rate from 35% to 21%, and state reactions have varied.  Some have followed suit in reducing corporate rates, while others have increased their rate, or moved to a flat tax. A few states have even projected changes out to 2021. Below is a summary of the corporate state tax rate changes that were made as a result of the TCJA.

Corporate state tax rate changes 2018 2017

Impact on Individuals and Businesses

With state tax rates frequently changing, individuals or entities that file in multiple states will want to be prepared for upcoming changes with appropriate tax planning.  Contact an Anders advisor to find out how these rate changes will impact you going forward. Learn more about TCJA changes in our Tax Reform Resource Center.

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January 28, 2019

What FASB’s Going Concern Standard Really Means for Your Company

Going concern is an accounting assumption that an entity has the resources to continue operating for the foreseeable future. It helps assure key stakeholders that the business has a secure financial future. The FASB issued ASU 2014-15 providing guidance on determining when and how to disclose going concern uncertainties in the financial statements. Since it was issued, there has been ongoing confusion surrounding its implementation. This ASU affects all companies and not-for-profit organizations, so it’s important to understand how to adjust to the update. Below we go into the details to better understand the standard.

Background on Going Concern

Under U.S. GAAP, an entity’s financial statements reflect its assumption that it will continue as a going concern. However, an entity may have uncertainties about its ability to continue as a going concern. Because there were previously no specific requirements under U.S. GAAP related to disclosing such uncertainties, auditors have used applicable auditing standard to assess an entity’s ability to continue as a going concern, which has resulted in diversity in practice. The ASU is designed to alleviate that diversity.

Key Provisions of the ASU v. the Auditing Standard

This ASU is a significant change in practice for entities experiencing financial difficulty, as it now requires management analysis, which will be subject to auditing procedures.  Additionally, the guidance applies to all U.S. GAAP financial statements, as opposed to the auditing standard, which only applies to audited financial statements.

Who Is Responsible for Preparing the Analysis?

The ASU places the responsibility for performing the annual going-concern assessment on management and contains guidance on how to perform a going-concern assessment and when disclosures are required. Under the ASU, making a determining regarding substantial doubt, conditions and events that exist should be analyzed in the aggregate. The ASU provides examples of relevant conditions and events.

Under the auditing standard, an auditor is required to evaluate the adequacy of going concern disclosures after concluding that there is substantial doubt about the entity’s ability to continue as a going concern.

It is critical management prepare an analysis. If management fails to prepare an analysis the auditor will likely consider this control deficiency as a significant deficiency or material weakness.

How Is Substantial Doubt Defined?

The ASU uses a probable threshold to define substantial doubt. The term probable is used consistently with its use in Topic 450 on contingencies, meaning “likely to occur”.

Conversely, the auditing standard does not define substantial doubt. The ASU’s basis for conclusions notes that some auditors and stakeholders previously viewed substantial doubt threshold as a lower threshold than the probable threshold. As a result, there could be fewer going concern disclosures under the ASU than there were under the auditing standard!

What is the Look Forward Period?

Annually, a privately held entity is required to assess its ability to meet its obligations as they become due for one year after the date the financial statements are issued. The auditing standard requires auditors to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time which is also defined as within one year after the date the financial statements are issued.

Implications of the change in the look-forward period may include the need to change forecasting to reflect the extended period, which may be a period that is not typically analyzed, and a possible need to obtain debt covenant waivers for an additional period.

When Are Disclosures Required?

No disclosures are required when management concludes that substantial doubt isn’t raised based on their evaluation of conditions and events, prior to consideration of potential mitigating effects of management’s plans that aren’t implemented.

If an entity triggers the substantial doubt threshold, its footnote disclosures must contain the following information:

If Substantial Doubt is Alleviated:
When it’s probable that management’s plans will be effectively implemented within one year after the date that the financial statements are issued and it is probable that management’s plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern substantial doubt is alleviated. In this case, the footnotes should disclose information that enables the users of the financial statements to understand management’s evaluation and related plans to mitigate those conditions or events. Generally, to be considered probable of being effectively implemented, plans must be approved by management or others with the appropriate authority before the financial statements are issued.

If Substantial Doubt Remains:
In addition to the above disclosures, when substantial doubt remains, the footnotes should include a statement indicating there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

We’re here to help. To better understand how this standard impacts your financial reporting, contact an Anders advisor.

Audit supervisor Laura A. Long, CPA was a contributor to this post.

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January 25, 2019

Strategic Guidance Leads to Growth for Cheree Berry

The Situation

Cheree Berry Paper (CBP), one of the nation’s premier custom stationery and graphic design firms, has designed wedding invitations for first families and delivered paper possibilities to Hollywood’s most sought-after stars. They have expanded from a one-person shop to a team of more than 20 women in just over a decade so they are adept at managing growth. In 2017, in addition to a large-scale office move, they began thinking of adding a brick-and-mortar retail shop to their custom studio space. That’s when leadership realized they needed more than a tax provider.

The Challenges

“As we expanded into this new model, it presented a whole additional set of considerations,” said Kristen Armstrong, Cheree Berry’s CFO. “We needed an accounting firm who could mitigate our tax liability, but also an organization that could provide expense classification guidance, advise on inventory, and act as a strategic partner.”

New business lines require new areas of expertise, so CBP began looking for a new strategic accounting partner. Through a business connection, they were introduced to the team at Anders CPAs+ Advisors and knew this firm could offer the high-level business and tax guidance their growing company required.

“Even in initial getting-to-know-you meetings, I felt that Anders could become a long-term, trusted advisor,” shared Armstrong.

The Solution

Anders worked with the leadership team at CBP to maximize tax savings during the office move and creation of a separate retail store. The team worked hand-in-hand with Armstrong to separate margins from the retail and custom side of the business for a more accurate, 360-degree view.

“In addition to the practical and operational advice, Anders offers continuing education opportunities and introductions to an impressive network of people,” said Armstrong. “I’ve benefitted from seminars exploring everything from IT to tax law changes.”

She adds that the breadth and depth of expertise at Anders is unparalleled. “If our team doesn’t know the answer to a question right away, someone in the firm will—and they all work together for our benefit.”

The Results

CBP’s leadership now has quarterly meetings with their team at Anders to discuss everything from tax liabilities and margin growth or shrinkage to cash flow projections and long-term financial planning.

“Multiple stakeholders are in these meetings, and Anders does a great job of presenting the facts and then our options for actions, clarified with pros and cons of each decision,” shares Armstrong. “When we leave those meetings, the entire CBP team feels comfortable with what was decided.”

She notes that Anders feels like a true partner and advocate for the company and brand—and that translates into results.

“This year, CBP grew by approximately 10% and Anders strategic planning helped us achieve that,” said Armstrong. “Our Anders team understands the business as it is today, but perhaps more importantly, they understand where we want to go—and are right beside us as we take the steps necessary to get there.”

Learn more about Cheree Berry Paper or the Anders Women’s Initiative.

Contact an Anders advisor to learn how we can help you or your business.

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January 24, 2019

Top 5 Financial Mistakes New Athletes Make

As a new athlete, it’s easy to become distracted by the glitz and glamour of your occupation and new money. While it seems like there is no financial shortage now or for the foreseeable future, many athletes make common mistakes that can get them into financial hardships. Whether it’s being surrounded by the wrong people or not having a long-term plan, these mistakes can multiply long after a player’s career is over. Below we outline the five the most common mistakes we see among professional athletes.

  1. Failing to engage a financial advisor early in their career. Notice we said, “financial advisor,” and not an agent. While it is easy to find a financial advisor, it is of the utmost importance to find a qualified one. Athletes are much different than the common client of most financial advisors. It is important to find a financial advisor that has experience working with athletes. Finding a good financial advisor and CPA team is crucial for an athlete’s money management.
  2. Ignoring tax planning opportunities. Tax planning is key when it comes to an athlete’s financial well-being. Hiring a CPA that has a good understanding and experience with athletes can keep more of an athlete’s money in their pocket. A CPA may be able to recommend various ideas such as establishing residence in a tax-advantaged state, understanding and implementing tax strategies suited to the athlete’s unique situation, and help timing income and deductions into certain tax periods to obtain the most tax advantageous results.
  3. Not thinking about the long-term. While it may seem like a very noble cause to buy everyone in your family a new home or Cadillac, it is most likely a poor financial decision. Rather than an athlete investing their new fortune in their future, they may spend it living lavishly with multiple cars and mansions that can house a small village. There are countless stories of athletes supporting very extended family and friends due to their sense of responsibility. An athlete must remember to stick to their personal long-term plan and protect their financial future.
  4. Failing to realize just how short their playing career may be. Some athletes do not take into consideration that they may only be playing for 5, 10, or 15 years or less to financially prepare themselves for the rest of their lives. That scenario doesn’t take into consideration the possibility of injury that may cut an athlete’s career much shorter than they ever anticipated. For most athletes, they won’t get an opportunity to make this much money again in a second career.
  5. Taking investment advice from or investing with former teammates and players. Many athletes will feel as though they might as well invest the same as their teammates. While there are many former players that are qualified to give financial advice, it is very important to consult a trusted financial advisor to ensure you’re making the best financial decision for your situation and goals.

It’s important that athletes take notice of the financial woes that their peers have encountered. While there are many financial mistakes new athletes can make, almost all of them can be avoided by hiring a trustworthy team of independent advisors. The Anders Sports, Arts & Entertainment Group is experienced in working with athletes and helping them navigate specific financial situations. Contact an Anders advisor to learn more.

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January 24, 2019

Collaboration and Strategic Startup Advice: the Perfect Fit for Babyation

The Situation

Samantha Rudolph and her husband, Jared, received an Arch Grant in 2015 to take their company, Babyation, founded on their proprietary redesign of an improved breast pump, to the next level. Fantastically, a cadre of vendors comes with the award—St. Louis companies that volunteer their time and talents to help startups navigate everything from accounting and finances to insurance and marketing. As part of the award, Rudolph was introduced to Anders CPAs + Advisors. Today, they are the only Arch Grant vendor she still uses.

“Everything was first-class—from the attention-to-detail to advice to responsiveness,” said Rudolph.

The Challenges

“A startup, by definition, is challenging,” said Rudolph, laughing. “From navigating growth to fielding investor questions to thinking about the evolution of Babyation, the birth and childhood stages of a startup are filled with unique challenges.”

Currently, they are talking to Anders about how the company structure should evolve when they are fully at market and past the “reserve your pump” phase—when they have an ongoing, continuing stream of revenue.

Thankfully, Anders has a team dedicated entirely to servicing startups so they have experience navigating a wide variety of road bumps across a multitude of product and service-based industries.  This expertise is invaluable for startup clients, especially when they are raising large amounts of capital.

“We needed a partner who could talk to our investors, was familiar with the investment documents we were using, and could grow as we grew,” said Rudolph. “Anders checked all those boxes.”

The Solution

The list of startup challenges is ever-evolving, but Anders is never more than an email or call away.

“They are willing to do whatever it takes. An investor had a question about tax implications and Anders immediately answered it,” said Rudolph. “That kind of responsiveness can have a direct impact on our continued funding and success so it’s powerful.”

In addition to business and personal accounting, Anders performs quarterly checks on the books and consults with Rudolph and other company leaders as the complexities of the business multiply.

“I just don’t have to think about it,” said Rudolph. “And that’s huge because there are so many other things I need to be thinking about at this stage of the business.”

The Results

She notes that Anders really understands the unique challenges and exposure of startups, and that they have the benefit of having seen hundreds of startups succeed.

“I’m continually impressed by Anders,” Rudolph shared. “I’m 100% confident that as Babyation grows, they will be able to provide the support and consultation that is right for that stage. Their historical knowledge of our company is helpful and allows them to customize how they support us as we evolve.”

In two years, Rudolph and her team have worked with hundreds of vendors and more than 50 in the consulting arena.

“Anders is the only vendor with which I’ve never experienced anything less than top-tier. It is amazing that they are able to provide this level of service for which they are known to such a large client base.”

Learn more about Babyation, the Anders Startup Group or the Anders Women’s Initiative.

Contact an Anders advisor to learn how we can help you or your business.

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January 24, 2019

How the Government Shutdown Could Impact Your Tax Return

The first filing season under the Tax Cuts and Jobs Act (TCJA) set to begin Monday, January 28 is being further complicated by the longest government shutdown in history. With only about 60% of IRS employees working during the shutdown and TCJA training on hold, many taxpayers are worried about the potential problems when it comes time for individuals and businesses to file taxes.

Will Tax Refunds be Delayed?

Though the majority of retained IRS workers are working with the promise of back pay when the government reopens, the IRS has made clear that taxpayers will be able to submit tax returns online or via mail and get their refunds even if the shutdown continues. There is a concern with the number of workers the IRS has retained, which could cause delays in processing refunds. It’s still unclear how long taxpayers will wait for refunds, but the IRS’s contingency plan ensures all refunds will be processed.

We’re keeping an eye on the government shutdown and potential impacts on tax filings and tax reform. Contact an Anders advisor to find out how your tax return will be impacted by the shutdown. Visit our Tax Reform Resource Center for information regarding the resources on how the tax reform will impact you, your family and your business, videos and blog posts on numerous changes under the TCJA.

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January 22, 2019

Tax Reform for Individuals: Charitable Contribution Deduction Changes

If you are charitably inclined and typically donate to your favorite not-for-profit organizations each year, you may be wondering how tax reform will affect your charitable giving. If you itemize your charitable donations, it’s important to understand how the new rules on charitable contributions will affect you. Below we cover what you need to know about your charitable contributions going forward.

General Deductions

More deductions will be allowed since the maximum allowable deduction for cash contributions has increased from 50% of Adjusted Gross Income (AGI) to 60%. Noncash contributions of long-term capital gain property will remain limited to 30% of AGI.

“80/20” Rule

College sports fans won’t be cheering for one new limitation. The 80% deduction for contributions made to a university for athletic seating rights is repealed. Under prior law, donors received a tax break for donations that granted them premium seating rights. Since this deduction is repealed, demand for high priced seating will likely decline due to donors losing this deduction. Watch to see if individual states decide to provide this deduction in the future.

Reporting Regulations

New tax law also states that contributors will have to prove their donation, even if the donee organization files the required return. Previously, there was an exception to the contemporaneously written acknowledgment requirement for contributions of $250 or more, if the donee organization reported the required information to the IRS. A contemporaneous written acknowledgment by the donee is now required as this exception has been repealed.

How to Continue Donating

While the changes are not too significant, the increased standard deduction may reduce the incentive of donating to charity in order to increase itemize deductions.

Qualified Charitable Distributions

There are a few ways to continue donating and receiving tax benefits: the first being a qualified charitable distribution. When a taxpayer turns 70 ½, it is mandatory that they take a required minimum distribution out of their IRA and retirement plan.  This money is taxable income, but it can also be gifted to any qualifying charity directly from an IRA.  If a distribution is directly donated, then it is not taxable income. Up to $100,000 per year may be directly transferred to an eligible charity.

Donor-Advised Funds

Donor-advised funds are a good option for continuing to give back.  A donor-advised fund allows taxpayers to contribute to the fund, which is invested and grows tax-free. At the donor’s discretion, the funds are gifted by the fund manager to the donor’s choice of charities. The taxpayer can then choose to itemize in the year that the donation has been made.

Visit our Tax Reform Resource Center for videos, blog posts and resources on how tax reform will impact you, your family and your business. Contact an Anders advisor with questions on how the new tax law will affect you.

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January 21, 2019

Anders Selects the Saint Louis Crisis Nursery as 2019 Charity of Choice

Anders partners and staff have selected the Saint Louis Crisis Nursery as the firm’s 2019 Charity of Choice. Now in its 14th year, the Charity of Choice program combines fundraising activities and volunteer efforts to support one local charity each year. Charities are submitted by members of the firm, and all members of the firm, from interns to partners, have the opportunity to vote for their choice at the firm’s meeting each January. In 2018, Anders raised more than $31,000 for Angels’ Arms.

An Anders audit staff member works closely with the Saint Louis Crisis Nursery and nominated the organization for Anders 2019 Charity of Choice. The Saint Louis Crisis Nursery is committed to preventing child abuse and neglect. The not-for-profit organization provides a short-term, safe haven for about 6,500 children a year, birth through age 12, whose families face an emergency caused by illness, homelessness, domestic violence, or overwhelming parental stress.

While activities such as Pick Me Up Carts, Busy Season Bingo and volunteer activities are held throughout the year, the first major Anders fundraising event will be the annual “Hoops for Hope” NCAA basketball pool, which draws participation from clients, colleagues, referral sources and friends of the firm from all over the country.

In addition to the Saint Louis Crisis Nursery, other beneficiaries of the Anders Charity of Choice program have included Angels’ Arms, Shriners Hospitals for Children – St. Louis, Stray Rescue of St. Louis, Friends of Kids with Cancer, Basket of Hope, Young Friends of Habitat for Humanity, Nurses for Newborns, Girls on the Run, St. Louis Crisis Nursery, Lafayette Industries, KidSmart, Re-Building Together and Kids Under Twenty-One (KUTO). Anders has raised over $305,000 in the past 14 years.

Learn more about the Saint Louis Crisis Nursery.

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January 18, 2019

Adam Prest Named Principal at Anders

Adam S. Prest, CPA, has been promoted to principal in the Tax Services Group at Anders.

Prest started at the firm as a tax intern in 2004 and worked his way up to principal, helping families, closely-held businesses and business owners plan for retirement and minimize their corporate and individual taxes. He advises small and mid-size businesses, including many in the hospitality, real estate and professional services industries. Prest also enjoys helping individuals and families lower their tax liability and plan for their financial future. At the firm, Prest played a key role in establishing the Anders Young Professionals Group, and serves on many strategic committees within the firm.

In the community, Prest is an active volunteer for Fair Saint Louis and helps organize the firm’s annual volunteer efforts for the organization. He has also held positions in the MOCPA, and volunteered his time for Basket of Hope, the St. Louis Sports Commission and the Sigma Nu-Mu Sigma Chapter Alumni Association.

Prest has been named a 2018 Best St. Louis Accountant and a 2016 Top St. Louis Accountant by St. Louis Small Business Monthly, a 2010 30 Under 30 by the St. Louis Business Journal, and the inaugural 2009 MOCPA Outstanding Young Professional of the Year. He earned a B.B.A. in Accounting from McKendree University in Lebanon, Illinois, and was named the 2015 Outstanding Alumni by his alma mater.

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