GFTC Tax Consultant's Point of View

Ask the Expert: What is the difference between Depreciation & Expensing?

chriscollado — Wed, 28 Sep 2011 17:57:38 +0000

The simple answer to the previous question is that short-term business purchases are expensed, while long-term assets are depreciated. If you read below, we define the two terms in order to illustrate their differences.

Operating Expenses

Operating expenses are expenses most businesses have, like: rent, equipment rental, utilities, supplies, postage, dues and subscriptions. Operating expenses are important because they reduce the taxable income of the business; they are “deductible.” In order to be deductible, expenses must be:

Ordinary and necessary to the operation of the business
Spent during the current year
Reasonable in amount (which is why meals and entertainment expenses are limited)
Directly related to the business.

Depreciation of Assets

Long-term assets that are used in a business can be deductible through the process of depreciation. In simplest terms, the cost of the asset is spread over a period of time, as determined by the useful life of that asset. For tax purposes, these assets are called “capital expenses.”

GFTC offers a Federal Depreciation Look-Back Analysis service that has the potential of improving cash flow by reducing our clients’ current federal and state income tax. Our process enables a company to accelerate federal tax depreciation into the current year from investments made in buildings and other fixed assets in the past. The cash savings realized from our analysis can be used in your business today.

For more information about our services and experienced professionals, please visit our website at www.genfitax.com or contact your local business development executive at 1-800-733-5252 ext. 7022.

Fixed Asset Management Solutions for Manufacturers

chriscollado — Fri, 23 Sep 2011 14:02:19 +0000

General Financial Fixed Asset Management Solutions offers services that enable manufacturers and distributors to accurately track their fixed assets for tax and financial reporting. Our experience has shown that for many reasons, including insufficient time and resources, fixed assets are often misidentified or misclassified and sometimes remain on a company’s books when they no longer exist. General Financial Fixed Asset Management Solutions’ customized fixed asset inventory and reconciliation process provides an accurate accounting, verification and classification of capitalized assets. Our fixed asset specialists track, reconcile and provide the information required to correct the cost and tax value as well as classifications of all fixed assets, whether they were purchased or the result of an acquisition. The “lynchpin” for making all of this work is the performance of a current fixed asset inventory.

Upon completion of the project, your company will not only have accurate fixed asset records but also a path-forward process for tracking and maintaining your fixed asset data, which can be controlled by your staff. Additionally, our firm can use the updated, verified fixed asset records to reconcile to and help prepare your company’s personal property tax returns.

Our inventory, accounting, and tax specialists offer over 15 years of experience working for companies throughout the United States and fourteen countries. We would appreciate the opportunity to discuss how our fixed asset management solutions can save your company both time and money. For more information about our fixed asset management solutions, please visit our website at www.genfitax.com or contact your local business development executive at 1-800-733-5252 ext. 7022.

GFTC Now A Member of the AH&LA!

chriscollado — Mon, 19 Sep 2011 16:26:17 +0000

GFTC is pleased to announce that we have recently become an allied member of the American Hotel & Lodging Association. For years, our tax professionals have assisted hoteliers and hotel management companies tackle a number of personal property and real estate tax related issues. Naturally, we were excited to partner with an organization dedicated to serving the interests of hoteliers nationwide. Some examples of services our staff has been able to provide hoteliers and hotel management companies include: Personal Property Tax Compliance and Audit Management, Real Estate Tax Valuation and Tax Bill Payment, Fixed Asset Inventory and Management, as well as Business License Management. GFTC also offers significant experience in the areas of Purchase Price Allocation, Cost Segregation and/or Federal Depreciation Look-Back Analysis.

In your are a hotelier interested in learning more about our past performance in the hospitality industry, please visit our website at www.genfitax.com or contact your local business development executive at 1-800-733-5252 ext. 7022.

For more information on the AH&LA and benefits they provide hoteliers, visit their website at www.ahla.com.

Ask the Expert: Cost Segregation vs. Federal Depreciation Look-Back Analysis

chriscollado — Wed, 29 Jun 2011 12:28:08 +0000

We are often asked by companies, what is the difference between Cost Segregation and Federal Depreciation Look-Back Analysis?

The short answer is Cost Segregation is transaction driven. For example, say a company requires a new company, constructs a new location or expands an existing location. The Cost Segregation is performed using current construction and engineering drawings. The purpose is to insure each asset is properly depreciated for federal tax. Federal Depreciation Look-Back Analysis allows a company to look back at any time at the entire capitalized asset base to determine if each asset, real, personal and intangible are correctly identified and the accurate cost is assigned to each asset. This allows a company to accurately recast its asset for federal tax.

When performing either process, it is important to consider Purchase Price Allocation, Capitalization Thresholds, descriptions for each asset, inventories and international Financial Reporting Standards.

We are currently working on a white paper that will extensively explain all of the inner relationships that must be considered when undertaking an analysis of this type. The Internal Revenue Service has issued new audit guidelines to insure that asset sampling techniques are not used or considered for capitalized assets.

For more information about GFTC’s Federal Depreciation Look-Back Analysis services, visit us at www.genfitax.com.

How Can You Be Sure Your Fixed Asset Records Are Accurate?

chriscollado — Tue, 28 Jun 2011 18:49:54 +0000

Has your company recently acquired another business? Has your company closed down its operations in a specific state and moved the assets somewhere else? How do you know that your company’s financial and fixed asset records are accurate and up-to-date?

In speaking with companies about their existing fixed asset management process, we have discovered that for many reasons, including insufficient time and resources, fixed assets are often misidentified and misclassified. Sometimes these assets remain on the books when they no longer exist.

Why are accurate fixed asset records important? Tax departments depend on the accuracy of the fixed asset ledger for reporting their assets on federal, state and property tax returns, and remit tax based on the amounts reported in the tax returns.

Our firm’s Fixed Asset Management Solutions division specializes in conducting detailed inventories of client sites, where we build a path-forward process for tracking fixed assets in order to ensure that your fixed asset ledger remains up-to-date and accurate. Our fixed asset specialists use two-dimensional barcoded labels, containing data that can be used by both the finance and maintenance departments, which they affix to each asset. When the maintenance department services an asset, replaces components, performs upgrades, or takes an asset offline, the barcode tags may be used to track this maintenance history on the assets and that number can be incorporated into the fixed asset system to create a link between maintenance and fixed asset systems. As a result, we leave our clients with a process, to be managed in-house, for ensuring that their fixed asset ledger remains accurate.

Our process tracks, reconciles and provides the information required to correct the cost and tax value as well as classifications of all fixed assets, whether they were purchased or the result of an acquisition.

For more information about General Financial Fixed Asset Management Solutions, visit us at www.genfitax.com.

Are You Getting the Most ‘Bang For Your Buck’ Out of Your Property Tax Compliance Service Provider?

chriscollado — Tue, 28 Jun 2011 18:46:40 +0000

As a result of the current economic climate, more and more companies are deciding to outsource operations that tend to bog down the time of internal staff. In our industry, personal property tax compliance is one of those commonly outsourced tasks. But our experience has shown that companies, who rely on other firms to file personal property tax returns on their behalf, seldom realize the full benefits they should. Often times firms simply take the information that their clients provide them and fill out the returns. While that may free up time for your staff, there is no real cash benefit or added value. Wouldn’t you want to verify that your records are accurate? Wouldn’t you want to know if there was a way to reduce your company’s tax burden?

At GFTC, our overall goal is to find ways to save our clients’ money. While personal property tax compliance may seem to be a routine task, we don’t treat it as such. We actively look for ways to reduce our clients’ tax liability and improve their cash flow. We conduct a comprehensive scrubbing of our clients’ fixed asset ledger, annually, to identify misclassifications, non-existent (ghost) assets, or obsolete assets. Our methods also include identification of exempt assets, assets subject to double taxation, a depreciation analysis and a functional obsolescence review. Not only do we reconcile our findings to your fixed asset ledger in order to verify the accuracy of your records, we ensure that any changes/updates are reflected on your personal property tax returns so that your company can realize the appropriate tax savings.

For more information about GFTC and to learn more about our services, visit us at www.genfitax.com.

Real Cost of Business License Management

chriscollado — Fri, 15 Apr 2011 13:00:49 +0000

Our experience has shown that many companies rely on internal staff to manage the filing of necessary business licenses and permits. What many of them have found is that business license compliance is a time-consuming task that often proves to be difficult to manage. Consider the amount of time that is spent researching license and permit requirements for your business activities and locations, obtaining the necessary forms, and gathering internal data. Not to mention the amount of time it takes to create tracking spreadsheets and calendars meant to help your company adhere to hundreds and, depending on the size of your company’s operations, even thousands of deadlines each year. Wouldn’t it be great to have a process that frees up your internal resources, streamlines the filing process, makes record-keeping simple, and doesn’t break the bank?

If you are looking for an inexpensive and effective way to manage your company’s business license compliance, consider GFTC’s business license and permit management program. Under our program, our firm assumes responsibility for identifying, tracking, filing, and maintaining up-to-date business licenses and permits on behalf of our clients. GFTC will conduct research to determine what licenses and permits are necessary for your business. After collecting the necessary information, GFTC will present you with a list of licenses and permits to be filed. With your approval, we file for the required licenses and permits prior to each deadline. In addition, GFTC will create a centralized database for your records and can provide you with online access to system to monitor our operations.

For more information on our business license management program or to learn about our other services, visit us at www.genfitax.com

GFTC Posts First Edition of New Quarterly Newsletter

chriscollado — Tue, 05 Apr 2011 17:43:49 +0000

General Financial & Tax Consulting is pleased to unveil our new quarterly newsletter.

Our newsletter is designed to keep you updated on new service offerings, industry trends, as well as organizational developments.

For more information on our services or to learn how to sign up to receive our newsletter visit us at www.genfitax.com

What if the Engineering, Accounting, and Tax Departments could all speak the same language?

chriscollado — Fri, 01 Apr 2011 14:30:25 +0000

With General Financial, now they can!

Through the fixed asset tracking program offered by General Financial Fixed Asset Management Solutions, a new division of our firm, we have the ability to help facilities link communication between the Engineering, Finance and Tax departments.

During an initial fixed asset inventory process, our project team will permanently affix a customized, barcoded tag to each asset. Upon completion of our physical inventory, when subsequent maintenance is performed, the barcode tags may be used to track maintenance history on the assets and that number can be incorporated into the fixed asset system to create a link between maintenance and fixed asset systems.

Consider the Benefits:

-Whenever an asset is discarded or replaced, each department will have access to that information.

-No longer will you pay taxes on non-existent assets or have to worry about the accuracy of your fixed asset records.

-Moving forward there will be a streamlined, improved process in place to be managed by our client.

To learn more about our Fixed Asset Management program, visit us at www.genfitax.com

President of General Data Discusses Benefits of Our Fixed Asset Program in Radio Interview

chriscollado — Fri, 04 Mar 2011 16:33:36 +0000

Peter Wenzel, the Founder and President of General Data, had the opportunity to discuss the benefits of General Financial & Tax Consulting’s fixed asset management program in a recent radio interview.

To hear what he said click the link below:

http://www.genfitax.com/Resources/GenFi_radiospot.mp3