Expanding your business is one thing, but doing so internationally is a whole other challenge. It’s a challenge that includes multiple layers, so it’s crucial to assemble a team to help guide your way. Patrick Mutchler of Brickley DeLong, an independent CPA firm in West Michigan, stresses the importance of developing a team when planning for inbound or outbound expansion. “For business owners, this team should include both a U.S. accountant and an overseas accountant they have faith in,” Mutchler said. “It’s wise to hire someone who specializes in designing company structure where the business plans to expand.” Every country behaves differently when it comes to business. Mutchler cited that even culture can affect international expansion. One example he provided was how in Germany, silence proves you know you are doing a good job. This is contrary to the United States where good performance is more vocalized with an ‘attaboy’ mentality. Mutchler went on to say that, even sales and marketing approaches may need to change. In the United States, a sale is more likely to happen based on personal relationships. The idea of “selling” in Germany is deemed a negative term; and, sales are more likely based on facts. “With culture and language barriers, it’s important to not overlook these realities when planning your expansion,” Mutchler said. Of course, there are far more complex challenges in international expansion—many of them falling within the accounting and tex realms, such as tax treaties. Brickley DeLong has experience establishing the necessary connections to formulate a thorough, communicative team in assisting an expansion. For example, Brickley DeLong is part of CPAmerica—one of the largest associations of independently owned and managed CPA and consulting firms in the United States. Through CPAmerica International, Mutchler and Brickley DeLong have a plethora of resources and marketing materials at their disposal, including access to Crowe Horwath International. “I can easily email someone at CPAmerica to locate an English-speaking accountant in the client’s desired expansion area,” Mutchler said. This can essentially set up a business owner with a local liaison. Having an advisor with a wealth knowledge of where you want to go will help in cultural differences, the understanding of local laws and more. Another thing to consider when building your team is to make sure communication is effective so there is no confusion in the process. Communication with outbound and inbound expansion can get technical, so it shouldn’t solely be done through email. Getting on the phone and being proactive is an important part of this process. Once these steps are done, your team starts to take shape. Mutchler said Brickley DeLong is so entrenched with their clients that together they excel at keeping the team fully functional and highly attentive. He also stated Brickley DeLong makes sure the team is comfortable with one another. This is necessary since the expansion development can be long and certainly not rushed. “Everyone is an important client,” Mutchler said. “We strive to give everyone the time and attention they deserve.” The process Brickley DeLong established has proved successful for expanding clients. Much of this is attributed to networking and relationship building overseas, namely in Germany, Canada, Austria, United Kingdom and Mexico. From visiting firms, preparing presentations and attending events, Brickley DeLong’s footprint overseas is well noticed. Visit Mlive for the original published article for more information.
What is an IC-DISC?
An IC-DISC is a tax-exempt entity that pays no federal tax on commission income. An IC-DISC, means a significant tax advantage by converting “ordinary income” taxed at 39.6% federal rate to maximum dividend rate of 23.8% (15.8% rate differential).
What are the requirements?
- The manufacturing requirement
The property must be manufactured, produced, grown, or extracted in the U.S
- The destination requirement
The export property must be held primarily for sale, lease, or rental for direct use, consumption, or disposition outside the U.S.
- The minimum of 50% U.S. content requirement
All export property may have no more than 50% of the value of the final costs attributable to foreign components. The fair market value of the foreign content is determined based on the dutiable value of the foreign components. Click here to learn more about international services.
For more information on IC-DISC’s and their benefits, please contact Larry Cooper at (231) 726-5840 or lcooper@brickleydelong.com
The Foreign Account Tax Compliance Act (FATCA) legislation was passed as part of the Hiring Incentives to Restore Employment Act of 2010. This legislation created various new requirements for account holders and financial institutions. The requirements have been phased in over the last few years.
A quick recap of the individual filing requirements
Individuals are required to file form 8938 as an attachment to their personal tax return starting in 2012. The form refers to foreign financial assets such as stocks, bonds, bank accounts, pensions, and other various assets. The foreign financial assets need to meet a certain dollar amount before the form is required. If you think this may apply, I would encourage you to review this blog post related specifically to this form.
Financial institutions were affected in a couple of ways and these rules took effect as of July 1, 2014.
- Foreign financial institutions are now required to provide certain financial information. This is in regards to financial accounts with United States owners, as well as entities’ accounts that have substantial United State owners to the Internal Revenues Service. So, many people will be seeing requests from their foreign financial institution to provide accounts owner’s name, address, and social security number. Companies with assets overseas will see similar requests, since they face the same filing requirement.
- U.S. financial institutions, with account owned by foreign individuals or entities, also have new requirements. The U.S. financial institution will have to collect specific data, as required by this legislation, or they will need to complete a 30% backup withholding on certain payments.
These two points became effective July 1. Therefore, banks will be working hard this year to gather the required data to comply with these new requirements. In addition, account holders will receive their requests for forms and information so the financial institutions can get their records in compliance.
For more information on this topic, please contact Patrick Mutcher, at (231)726-5870.
Author: Patrick Mutchler, CPA
The IRS has just simplified the process for taxpayers who hold interest in Canadian retirement plans. Prior to now, the reporting for Canadian retirement accounts was different than other countries, and this led to failed compliance by many taxpayers.
It is necessary to point out that U.S. citizens are taxed on their worldwide income regardless of where they live. So, a U.S. citizen living aboard should be filing a U.S. tax return every year. The filing of these returns is complicated by the fact that each country has a unique tax structure and unique types of retirement accounts.
Canadian Retirement Plans Previous Requirements
As stated above, Canadian Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Funds (RRIF) have been taxed differently than one would expect. The accumulation of income within these plans was taxable every year, unless an election was made. Many individuals were unaware that an election was required, and treated these plans like an Individual Retirement Account (IRA) in the United States.
RRSP and RRIF information was required to be reported annually on form 8891, whether an election to defer this income is made or not. The different components of income inside the accounts would need to be reported in a similar manner to a brokerage account income.
Current Changes
The IRS now has now made it so that those with RRSF or RRIF accounts automatically quality for tax deferral, similar to U.S. IRA and 401(k) plans. In addition, the requirement to file for 8891has been eliminated.
For more information on taxation of RRSP and RRIF’s please visit Revenues Procedures 2014-55, the IRS website, or contact Patrick Mutchler at pmutchler@brickleydelong.com.
Author: Patrick Mutchler
In June 2014, the IRS Commissioner and the IRS National Taxpayer advocate announced the release of an IRS “Taxpayer Bill of Rights” to better communicate existing taxpayers’ statutory and administrative protections.
To increase awareness of this bill of rights, the IRS has produced a publication to accompany its correspondence. This has been posted in public areas of the IRS buildings, communicated directly to IRS employees, and posted on the IRS website.
The 10 rights are:
- The right to be informed;
- The right to receive quality service;
- The right to pay no more than the correct amount of tax;
- The right to challenge the IRS’s position and be heard;
- The right to appeal an IRS decision in an independent forum;
- The right to finality (e.g. to know the maximum time for challenging an IRS position, for being audited, or when an audit is finished);
- The right to privacy (e.g. IRS compliance with laws and respect for due process in inquiries, examinations, enforcements, etc.);
- The right to confidentiality of information provided to the IRS;
- The right to retain representation; and
- The right to a fair and just tax system.
These rights are not new to the IRS, but are being published so taxpayers better understand what their personal rights are.
For more information on this topic, please read this article or contact Brian McFarren at (231) 726-5815 or bmcfarren@brickleydelong.com
Author: Brian McFarren
As the end of the year approaches, we have some identified helpful articles for individuals and businesses owners to prepare for the upcoming tax season:
What’s New for Federal Income Taxes 2014?
For more information on year-end tax planning strategies or to schedule an appointment with one of our CPAs, please contact us at 616-608-8500 (Grand Rapids office) or 231-726-5800 (Muskegon office), and please check out our page on Individual & Business Preparation and Business Consulting.
CPAmerica International, an association of approximately 75 U.S. CPA firms provides benefits to members in 7 major areas:
- Members events including 1) exclusive conferences, 2) webinars, 3) trainings and workshops, 4) member sharing calls, and 5) specialized events during which members share best practices, network, collaborate, and learn from nationally-recognized speakers.
- Practice Management Survey – an annual benchmarking practice management ranking survey of member firms.
- Expert services provided by CPAmerica’s national directors of tax and A&A who facilitate and refer matters to experts.
- Discussion lists via e-mail provide members with immediate access to fellow members on 30 topic areas.
- International connections – CPAmerica is a member of Crowe Horwath International, which is a network of 100 firms with 2,600 professionals across the globe and which provides worldwide resources to members.
- Visitation Improvement Program (VIP) – each member firm is visited every four years by a team of two member managing partners serving as consultants on selected topics for improvement.
- Crowe Horwath LLC National Tax Office (NTO) – allows members access to Crowe’s NTO and other specialized resources.
For more information on CPAmerica benefits, click here, or contact Timothy Arter at (231) 726-5820.
In August 2014, the AICPA Accounting and Review Services Committee (ARSC) approved clarified and revised standards for reviews, compilations, and engagements to prepare financial statements. The standards will be issued in 2014 fourth quarter, effective for periods ending on or after December 15, 2015, with early implementation permitted.
The standards provide clarity and revision on:
- When the accountant is engaged to prepare financial statements, but is not engaged to perform an audit, review, or compilation on those financial statements.
- Guidance when an accountant is engaged to perform a compilation engagement on financial statements, including compilation report requirements.
- Review engagement requirements.
For a brief article by the AICPA on related topics click here or contact Timothy Arter at (231) 726-5820.
Community involvement has always been at the core of our firm’s values. One of the ways that we choose to be active in our community is through our annual United Way Campaign. This year, our campaign ran throughout the month of October and was themed “Supporting One of Our Own”. Because October is Breast Cancer Awareness Month, and, earlier this year, one of our employees was diagnosed with this type of cancer, we felt this theme fitting.
This year, we exceeded our planned goal and were able to raise $11,860 for United Way and had 100% employee participation!
One of our partners, Don DeLong, is actively involved in the Gulu Uganda Country Dairy Project. If employee’s donated $1,000 towards Partners Worldwide, he agreed to match this. This was achieved, and has allowed Brickley DeLong to donate a cow to the farm!
In addition to this, we had a supplementary collection for Mercy Health Comprehensive Breast Center. Our kitchens were full of many baked goods and snacks that employees could purchase for this cause. The firm also sold breast cancer awareness pins, and employees had the option to donate money and wear jeans on Fridays. On October 22, we had a firm wide “Pink Day”. All employees were encouraged to wear pink in support of breast cancer awareness. Overall, we were able to collect over $1,000 specifically for this cause.
To celebrate our achievement, on October 31st, we had a potluck in all offices. This included auctioning off four gift baskets. Each of these baskets was themed (spa basket, ice cream basket, Movie night basket, and Jack and Coke Cake). There was also a bidding war between employees for, what we named, “The Tower”. Ed Elsner, was our highest bidder and the money was added to our Mercy Health donation.
Brickley DeLong has always encouraged and supported employees in their unique roles in the community. Our annual United Way campaign is just one way that we choose to give back, and in a fun way.
I invite you to visit our community involvement page to learn more about how our activity in West Michigan.
Recently, CGMA magazine published an article summarizing five essential steps when implementing an effective corporate ethics policy. Authors, Tanya Barman and Samantha White, attempt to help readers implement an ethics policy, which becomes embedded in the company culture and which avoids a disconnect between company intentions and behaviors.
The 5 essential steps are:
- Document Code of Ethics;
- Continuous communication and awareness campaigns;
- Training and reinforcement;
- Develop and “ethical architecture” to support the Code context and culture;
- Develop process and structure for monitoring and accountability.
To access the full CGMA article click here; to discuss development of code of ethics, contact Timothy Arter at (231) 726-5820.