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Pursing your business dreams is a challenging road and one thatI believe is well worth it through the best and worst of times.Having the right team both internally and externally make it allpossible and bring so much joy, friendship, and purpose to allyou do. Trusted experts such as Berntson Porter have been animportant part of our extended team as we’ve started the nextleg of our journey. Wishing you great success.Stuart Robertson, CEO, ShareBuilder Advisors, LLCYEAR-END PLANNING FORHOSPITALITY BUSINESSESIn addition to the changing colors, arrival of pumpkinspice lattes, and holiday planning, fall is also a great timefor comprehensive year-end financial planning. Hospitalitybusinesses face unique challenges including seasonality,changes in the economy and government regulations as wellas increasing competition. Berntson Porter understands thesechallenges. Through careful planning and collaboration, ourexperts help companies in the hospitality industry comply withtax and financial reporting requirements as well as streamlinetheir financial processes by providing insights and valuableconsulting services along the way. Here are several items toconsider to position your business for success this fall:restaurant owners by eliminatingthe depreciation category for 15year qualified restaurant property.However, businesses may be ableto take advantage of increasedbonus depreciation for qualified property components identifiedthrough a cost segregation study. Companies may also be ableto take advantage of qualified improvement property eligiblefor Section 179 expensing, such as roofs and HVAC.Prepare for financial reporting requirements – Fall is a goodtime to negotiate your level of financial statement reportingrequirements with your lender as the different levels ofservice (audit, review, compilation) have varied costs and timecommitments. Your lending arrangements may also requireyou to maintain certain financial ratios. Reviewing covenantcompliance prior to year-end together with tax planning willallow you to address any potential problems in advance.Plan for your tax return by optimizing tax credits anddeductions – The tax landscape is ever changing and thereare numerous tax incentives that are available for hospitalitycompanies.Work Opportunity Tax Credit (WOTC) – This federal tax creditis available to employers that hire a certain class of eligibleemployees that have consistently faced significant barriers toemployment. Examples of eligible employees include qualifiedveterans, Supplemental Nutrition Assistance Program (SNAP)recipients, ex-felons, and vocational rehabilitation referrals.An employer must obtain certification that an individual is amember of the targeted group before the employer may claimthe credit.Review current year performance and set goals for nextyear – Planning for a successful year starts with a review ofcurrent year operating results, establishing goals and preparinga budget for the upcoming year. Setting a budget is helpful inthe preparation of long-range goals and short-term objectivesby planning for the most economical use of labor, facilities andcapital. Other valuable analyses include benchmarking andinternal control review. Benchmarking involves comparingthe company’s policies, products and strategies to othercompanies in the same industry. An internal control reviewis an evaluation of current processes and procedures to helpensure that a company is safeguarded against fraud or financialloss as well as improve financial reporting and operations.FICA Tip Credit – Restaurants are able to request a crediton their federal tax return for Social Security and Medicaretaxes paid by the employer on certain employees’ tips thatare not used to meet the federal minimum wage. Tax savingsby claiming the FICA Tip Credit can be significant, but mayrequire professional assistance to calculate as certain amounts,such as service charges, may not apply.Estate planning and gifting – Estate planning is an importantelement of any business owner’s financial plan to protect theirwealth and legacy. Comprehensive planning to understandyour legacy intent, tailor an estate plan to meet your goals andensure that your plan is structured to perform according to yourwishes should be performed and revisited any time there arechanges impacting your family and / or business. Year-end isalso a good time to plan for your charitable and holiday giving.R&D Tax Credits – More companies than ever are eligibletoclaim the R&D Tax Credit and take advantage of its benefits.Any company that designs, develops, or improves products,processes, techniques, formulas, inventions, or software maybe eligible for the tax credit. For example, a winery, brewery ordistillery that develops a new bottling process would potentiallyqualify. Credits can be calculated based on actual materials andresearch costs incurred and employee payroll amounts.For more information on how we can help your companyreach its goals, please contact Rebecca Young, CPA,Senior Manager and Hospitality Practice Group Leader,at 425-289-7632 or ryoung@bpcpa.com.Bonus Depreciation and Cost Segregation – The TaxReform Act of 2017 negatively impacted the tax liability for3www.bpcpa.com

DC AND STATE HIGHLIGHTSChanges and updates to tax laws, regulations and rulingsNew W-4 Form in 2020through withholdings or estimated tax payments. The normalthreshold for avoiding the penalty is 90%, but it has beenlowered for 2018 in response to confusion surroundingplanning for the new tax law. Any taxpayers who have alreadyfiled will have the waiver applied automatically, those whohave paid the penalty will have it refunded.The Treasury and IRS haveredesigned Form W-4 to makeit simpler to follow and lead tomore accurate withholdings.Many taxpayers were not having enough withheld from theirpaychecks in the wake of the Tax Cuts and Jobs Act eliminatingthe personal exemptions and other deductions. This new formtakes the new tax law into account to calculate more accuratewithholdings. There is no requirement for employees to submita new W-4 and employers can continue to withhold based oninformation from their most recently submitted W-4.Capital Gains Will Not Be Indexed to InflationThe White House has announced that there is no current planto index capital gains to inflation. The controversial proposalwould have greatly reduced taxable capital gains, but drewcriticism that the benefit would have been concentrated amonghigh-income taxpayers and would do little to benefit the middleclass.Additional Florida Reporting RequirementFlorida has passed a new law requiring companies filing Floridacorporate returns to submit an online form with additionalinformation. Currently the requirement is only in effect for the2018 and 2019 tax years. The additional information relatesprimarily to foreign income and interest expense limitations.Failure to submit the form in a timely manner will incur apenalty of the greater of 1,000 or 1% of tax due.IRS Focusing on Virtual Currency TransactionsThe IRS has said that it will make virtual currency transactionsa focus of its compliance campaign. Taxpayers are requiredto report virtual currency as property subject to capital gains.Transactions involving virtual currency are underreported dueto many taxpayers’ belief that the IRS does not have the meansto connect virtual currencies to the taxpayers holding them.The IRS sent out letters to more than 10,000 taxpayers in Julyalerting them to the requirement to report their virtual currencytransactions and pay the corresponding taxes.IRS Waives Estimated Tax Penalty for 2018The IRS has automatically waived the estimated tax penaltyfor taxpayers who paid at least 80% of their total tax liabilityYEAR-END PLANNING FOR MANUFACTURERSAND DISTRIBUTORSYear-endplanningallowcompanies to put themselves inin an advantageous position whenit comes to compliance reportingrequirementsbyminimizingpotential tax liabilities whilelooking at financial statementreporting issues, such as meetingbanking covenants.will need to keep in mind that the new guidance will likelyrequire a change to how they are recognizing revenue and thatthey may need to evaluate their internal processes to be able tobetter track information related to these goods and services. Thefive steps appear simple at first glance but have the potential tohave an extensive impact on many facets of a business.Additional Financial Statement recommendations: Understanding and confirming with 3rd parties the levelof financial statement service required - audit, review, orcompilation. Each of these have differences in timing andcosts.Revenue Recognition:The largest impact to financial statement reporting this yearis the new revenue recognition standard which went intoeffect on January 1, 2019 for privately held companies. Thisnew standard requires companies to use a five step model todetermine when revenue should be recognized. Applicationof the new standard will likely result in the same amount ofrevenue in total, however, timing of when revenue can berecognized may change. Covenant compliance – perform a preliminary calcula-tion to project compliance, and address potential issuesbefore year-end with your lender, especially consideringthe new revenue recognition standard. Physical inventory counts – Performing cycle counts ona schedule or a full scale count is the best way to ensureaccuracy in inventory quantity at year-end. Additionally,observation and test counts are required if an audit of thefinancial statements is needed. Get these on the calendarCompanies that offer warranties, loyalty programs, discountedrenewal options, volume discounts or other vouchers or rebateswww.bpcpa.com4

now and engage your BP professional to assist with theplanning and execution of the count.for tax purposes. Section 263A only affects distributorsand manufacturers that have over 26 million in averageannual gross receipts over the prior three years. If yourcompany is nearing the 263A threshold, consider if thereare ways to defer recognition until the next year. If yourcompany is already subject to 263A, reducing inventorylevels at year-end can help lessen the impact. Evaluation of inventory – consider if there is anyimpairment, and if a write-down to net realizable isneeded, or an allowance for potential excess or slowmoving items. Remember than an allowance is anexpense for book purposes, but not for tax purposes untilthe items are actually disposed of. One way to receivethe deduction for tax purposes may be to donate theinventory to a qualified 501(c)(3) organization. Research and development tax credit - This is apermanent government endorsed tax incentive thatrewards companies for using research and developmentto improve their processes. The credit can be retroactivelyapplied for the prior three years, which means it’s not toolate if your company missed the credit in the past. Manycompanies can qualify for this credit, so be sure to askyour BP advisor for consideration of this opportunity. Timing of shipments and receipts – develop a plan toensure that all inventory purchases and sales are recordedin the proper period, which is usually driven by the timingof the physical flow of goods, but also the shipping terms.Tax recommendations: Property and Equipment – 100% Bonus depreciationWith the first year of the Tax Cuts and Jobs Act of 2017 behindus, it is still important to think about some of the changes thatcame with the new tax law.can be used for new or used assets with a depreciablelife of 20 years or less. Bonus depreciation is in effectthrough 2022 and will be reduced by 20% a year after2022 until full phased out in 2027. Equipment purchasedfrom related parties or that was previously leased is noteligible. Section 199A Deduction for Qualified Business Income– Section 199A allows for a 20% deduction on qualifiedbusiness income for domestic pass-through companies,which creates an effective top tax rate of 29.6%. Qualifiedbusiness income is generally taxable income less interest,dividends, and capital gains and losses. The specificapplication of Section 199A varie

t ShareBuilder 401k, our mission has always been to lead Americans to Save. We took (and continue to take) the cost out of 401(k) plans and help make 401(k)s easy to buy so any size company can have a plan – and one that can help employees save more too. There are about 30M business