Accounting Firm Explainer: Tennessee Business Tax Changes

 

Small businesses in Nashville and other parts of the state are ready to feel the relief provided by the modified Tennessee Works Tax Act. Announced in early 2023, some of the legislative changes start to apply this year. They’re said to be part of the biggest tax cut in the history of the state. 

If you need a last-minute guide to the updated law, this accounting firm explainer discusses the most relevant points for small business owners.

Filing Exemptions

The business tax filing threshold has been increased from $10,000 to $100,000 per jurisdiction. This means that businesses with annual gross sales of less than $100,000 are now exempt from filing an annual return. The Department of Revenue estimates that over 100,000 businesses are affected and are encouraging owners to take advantage of this major change. 

Read more from this blog: https://bit.ly/EvanH60

Straight from a CPA: How to Avoid a Small Business Tax Audit

 

No business owner wants to deal with an IRS audit. While the chances of being selected for one are slim, they’re not zero. Some audits are random, while others stem from red flags on the taxpayer’s return. Auditors also have three years from the time a tax return was submitted to trigger the process. 

Simple calculation mistakes, overestimated deductions, and even a missed signature can already sound the alarm for an audit. Fortunately, there are ways to further reduce the odds of being chosen as a subject. The following are what a CPA considers good tax practices that will keep the IRS off your back.

Read more from this blog: https://bit.ly/EvanH59

A Startup’s Guide: Moving from Cash-Based to Accrual Accounting

 Most startups tend to choose cash-based accounting in the early stages of the business. This is primarily because recording income as it comes in is straightforward and easy to understand. While there is nothing wrong with this, businesses that have been around for a while and are starting to expand may face issues with cash-based accounting.

The limitations of cash-based accounting become increasingly apparent as startups grow and their financial operations become more complex. For instance, it can be challenging to track payables and receivables effectively, or to accurately assess the company's long-term financial health. Additionally, cash-based accounting does not meet reporting requirements for businesses with more than $25 million in revenue within a timespan of three consecutive years.

To address these challenges, many startups consider transitioning to accrual accounting with the help of a trusted CPA firm.

Read more from this blog: https://bit.ly/EvanH58