General Articles

For those with foreign bank and financial accounts, it is extremely important that they understand how to report these accounts. New regulations can create serious penalties for a business or person that fails to file.

First, let’s take a look at what a foreign financial account is. A foreign account is an account outside of the United States and its territories, such as Puerto Rico and the District of Columbia. For example, a bank account located in a Mexican bank would be considered a foreign financial account. And, so would a brokerage account located in Italy. The securities insides the account are not the issue when defining a foreign financial account, it is the account itself. So, a brokerage account opened in the U.S. that invests its securities outside the U.S. would not be considered a foreign account, since the brokerage account was set up in the U.S.

When a person has foreign financial assets in foreign accounts, with a collective value exceeding $10,000 for a single day, it is necessary for the person to file form 114 (formerly form TD F 90-22.1) by June 30^th with no extension allowed. It is important to note that filing an extension for your tax return does not extend this deadline. The penalty for failure to file is applied on an account by account basis. The civil penalty is limited to not exceed $10,000 per violation. However, a willful violation will be assessed a penalty of $100,000 or 50% of the account value (whichever is greater).

So, who is considered a person? A person is defined as a U.S. citizen, a resident alien, or an entity organized in the United States. Therefore, corporations, partnerships, trusts, limited liability companies, and individuals are required to file.

When reporting, a person must include accounts where they have direct financial interest, owned through an entity or accounts that they have signature authority over. For example, if you have a family member overseas, who gives you signature authority over their personal accounts, in case you need to access them, you now have to include their account in determining if you are required to file and included their account in your filing.

The value is a collective value of all accounts. Therefore, if there are four accounts with one dollar each, and a fifth account with $9,999, a return would be required to be filed since the aggregate value of all five accounts exceeded $10,000. In addition, all five accounts would be required to be included on the form. Accounts that were closed during the year also must be included on the form as well.

As the world gets smaller, this will become a bigger and bigger issue. Please contact us if you need assistance or it is unclear whether you need to file.

Author: Michael Glowacki, Intern

I had no idea what to expect going into an internship. I had not always considered tax my strongest subject in accounting. My first day, I met with Valarie Lewis, who trained me on how to log in to the program to prepare returns. I would be focusing on 1040’s for the duration of tax season. After a week of getting familiar with the program, I discovered my ability at doing taxes. I should have had more faith in myself. The program makes inputting the data far easier than what I had learned in class. Doing things by hand and with great uncertainty had deterred me from wanting to practice tax accounting. It seemed like a foreign language to me in school. I decided I really liked being a tax accountant. I wanted to stick around and do more of this.

To my surprise and with the utmost gratitude, the firm extended my internship through summer. I would be getting a first glance at audit work, and learning a whole new program and a new set of skills. I even had the opportunity to delve into QuickBooks. My main duties in the summer included payroll and bookkeeping. This helped me continue to gain experience in the professional world, and build my resume as a valuable employee. What I learned over the course of that eight month period also gave me an advantage for my last semester of school in terms of the topics I would be studying.

I am now on a third internship with Brickley Delong this fall and I could not be happier. I went into this job only expecting to be around for tax season assistance, and it turned into something far better. I have had the privilege of learning about multiple aspects of the accounting profession. I enjoy my work and the coworkers. I think that is everyone’s career goal, and I have reached it through my internship.

When this semester is over, I will be a Ferris Graduate and have 150 credit hours (a great deal of them attributable to internship credits). This will allow me to get licensed as soon as I pass the CPA exam sometime within the next year. My long term plan is to stay on with Brickley Delong, the firm that took a chance on me, and has taken great care of me ever since. They have helped me kick-start the promising career in accounting that I have been chasing for the last four years. I can not express how grateful I am for the opportunities that they have given me. It is comforting as a student to have a plan after graduation. I feel confident and less stressed about transitioning into the professional business world. I recommend that any student who can get an internship take it and run with it. The possibilities are endless. As they say, an internship is a continuous job interview. It will only help you build your resume, skill set, and value in the long run.

For more information on internships at Brickley DeLong PC, please visit our career pages or contact Christine Dill, cdill@brickleydelong.com or (231) 726-5835.

Author: Michael Glowacki, Intern

Like many college students, I changed my college major. Oddly enough, I started my journey in the pharmacy program at Ferris State University. I hacked my way through Pre-Pharmacy for a year before deciding it was not for me. So, as anyone would do in that situation, I went and talked to a counselor who tried to pinpoint my interests and figure out what other avenues might suit me.

In High School, I signed up for an online accounting course and dropped it due to schedule conflicts. In the back of my mind, I knew I would have been successful in the class, had I taken it in person. I recalled taking that accounting class while talking to the counselor. I decided I would give accounting another chance. So, in my second year, I took accounting principles 1 and 2 and absolutely loved it. It made sense to me; I grasped the concepts, and I felt I really found my strong suit… my niche. Who would have thought? Most people think accountants are boring and completely serious all the time. That could not be more false, with regards to the people I have encountered on my journey into the accounting profession.

Moving forward to my senior year in the accounting program, I became the treasurer of the Accounting Association at Ferris. I had been told that you would not get hired for any job if you did not take an interest in your program’s extra-curricular groups. You had to prove your dedication. This is why I graciously accepted the position after being a member of the group for a year. I was not being lied to; being in the association opened doors for me.

The fall of my senior year I went to the career fair under the discretion of my instructors. This was the first time they had an influx of employers looking specifically for accounting majors. I was thrilled and nervous at the same time. At the fair, I met Paul Gilbert and Jennifer Kloosterhouse. I recall talking with them for about a half an hour, far longer than any other people I had encountered that day. With their information in hand, I left their booth. Later, my academic advisor stopped me in the gymnasium and told me to go back to Brickley DeLong’s booth because they wanted to give me an on-the-spot interview. I was ecstatic!

To make a long story short, I interviewed with Paul later that day. Then, I was invited to an office visit in Grand Rapids, where I interviewed with Grand Rapids staff and Timothy Arter, the firm’s managing partner. After receiving the offer, I started as a tax intern in January. The firm worked around my class schedule so I would not fall behind my graduation goals.

For more information on recruiting and hiring at Brickley DeLong PC, please visit our career pages or contact Christine Dill, cdill@brickleydelong.com or (231) 726-5835.

Selecting the right entity type for your business is a major determining factor in the taxes you will pay. There are many alternatives to choose from and each alternative has its benefits. Here is a brief look at the different alternatives and reasons why each entity type might be used.

• Sole Proprietorship – These entities are not very common anymore. There is no separate legal entity, and all income of the business is subject to income taxes and self-employment taxes (social security & Medicare taxes). In addition, there is also no legal liability protection between the individual and the business. This structure would be beneficial for a small business that is more of a hobby with no significant possibility of litigation.
• Single Member Limited Liability Company (LLC) – This type of entity provides limited liability protection to the owner of the company. Single member entities are treated as disregarded entities for tax purposes. As a result, they are taxed the same as a sole proprietorship and subject to the same taxes, but provide some protection to the owners from creditors.
• Limited Liability Company (with more than one owner) – By default, these entity types are taxed as partnerships, unless another election has been made. Partnerships allow the pooling of resources by multiple individuals or companies. This entity type does not pay any income taxes. The income is passed along to the owners of the partnership, who include it on their returns. An individual who owns and actively works in the business would include the income on his or her return and be subject to income taxes and self-employment taxes.
• Corporations – This type of entity can be taxed in multiple ways. A corporation is organized and taxed in two primary ways. It is important to review the company’s industry, financial position and projected income when deciding which type of entity to select. In both types of entities, the owners who are active in the company must receive reasonable compensation for the work they perform.
  •   S-corporations are flow through entities, similar to the partnership above. They are not subject to federal income taxes; but, they do pass their income along to the shareholder, who must include it on their tax return. Corporations must qualify to elect to be taxed as an S-corporation.
  • C-corporations are separate tax paying entities. They pay federal taxes on their income. The tax is based on graduated rates starting at 15% and increasing to as high as 35%.

This is just a taste of what you can select and why you might select one. For more information, contact Patrick Mutchler at pmutcher@brickleydelong.com or (231) 726-5870.

Author: Donny A. Baird, staff accountant

My name is Donny Baird, and I am a staff accountant for Brickley DeLong. I graduated with my Bachelor’s from Grand Valley State University in 2012, and I am finishing up with my Master’s.

As a recent student in Grand Valley State University’s accounting program, I can say that my college experience has allowed me to understand the general concepts and theories needed for “real world” public accounting. My coursework in business and accounting has permitted me to have a greater knowledge of work expectations and business procedures. In my typical day at Brickley DeLong PC, much of my activities relate directly to what I learned in the classroom. I am able to use these concepts in the real world and bridge the gap to our clients.

While working towards my bachelor’s degree, I interned at Boyne Machine in Jenison. This experience allowed me to challenge what I learned in the classroom and apply it to a single company. Now, serving in a public accounting firm, I get to apply these principles to many different businesses and individuals.

Every day is a new challenge in an accounting firm. The field of accounting is always evolving, and new laws and regulations require continual training. College training is necessary, but it is important that as accountants, we never stop learning and continue our desire to grow as professionals.

For more information on the experience of working in a CPA firm, please visit our accounting career pages or contact Christine Dill (231) 726-5835.

There’s been a lot of talk about raising the minimum wage not only in Michigan, but nationwide this year.  Starting January 2019, the regular minimum wage will be adjusted based on the average annual percentage change in the Midwestern consumer price index over a five-year period. The adjustment will be capped at 3.5 percent, and there will be no increase if the state unemployment rate is 8.5 percent or higher.  

Effective September 1^st, 2014 the hourly minimum wage will increase from $7.40 to $8.15. Also on September 1, the minimum wage for tipped employees will be 38 percent of the regular minimum wage. It’s currently $2.65 per hour, which amounts to about 35 percent of the $7.40 minimum wage. 

Minors 16-17 years of age may be paid 85% of the minimum hour wage rates. For training wages a rate of $4.25 per hour may be paid to employees 16 to 19 years of age for the first 90 days of employment.

Overtime employees are covered by the Workforce Opportunity Wage Act and must be paid 1-1/2 times their regular rate of pay for hours worked over 40 in a workweek.

For more information on the minimum wage in Michigan and how it has changed see the link below or contact Terry Maycroft (231) 726-5825. http://www.michigan.gov/documents/cis/MWPosting.Optional_9_25_06_single_page_173925_7.pdf