Lee Bell Quoted in Article on Community Banking

Lee Bell, Shareholder, was recently quoted in an article written by Margie Manning of the Tampa Bay Business Journal regarding Tampa area community banks.  Below is an excerpt of that article.  To read more, visit the Tampa Bay Business Journal's website.

Performance improving, with a caveat
Margie Manning

Tampa Bay area community banks gained strength on their balance sheets and income statements in the third quarter. As a group they bolstered capital and made a profit compared with a net loss in prior quarter.

However, the turnaround is attributed more to failure of a dozen of the biggest statewide money-losers than to performance improvements.

“I don’t know that we’re seeing that banks are starting to make money that weren’t making money, but some of the banks that were losing money have continued to lose but at a slower pace or they are gone,” said Lee Bell, shareholder in charge of the central Florida practice for accounting firm Saltmarsh, Cleaveland & Gund.

The health of the banking industry is critical for small to mid-size businesses that rely on community banks for credit and other services. Stronger banks are in a better position to make loans to be used by businesses to expand and hire, increase purchases from other businesses and in turn boost the economy.

QuickBooks Tips & Tricks: Capped Sales Tax Procedure

How can I handle a capped sales tax amount in QuickBooks? Many states, including Florida, have county sales tax rates that cap at a certain amount and then are not charged on the amounts that exceed the ceiling. For example, Escambia County in Florida does not charge the county surtax of 1.5% on amounts over $5,000.00 included in one sales transaction. If a customer has an invoice totaling $6,000.00 and is subject to the Florida State and Escambia County tax rates, the sales tax rates that apply would be 6% on the full $6,000.00 and 1.5% on the $5,000.00 or $75.00.

QuickBooks does not have a method set up to automatically handle these capped sales tax amounts. There is a simple workaround that is very effective in dealing with this problem. The first step is to create two sales tax items: a Florida Sales Tax with a 6% rate and an Escambia County Capped Sales Tax with a 0% rate. If you do not already have a subtotal item you will need to set that up as well.

To create a subtotal item, open the Item List and right click. Select “New” from the menu options and select “Subtotal” for the item. Type the word “subtotal” in the Item Name/Number and Description areas. Then click on “OK”.

Next, create the customer invoice. At the bottom of the invoice select a Non-Taxable sales tax code. You may have to set this up if you do not have one already. Select the items being sold to the invoice as you normally would. Make sure each individual line with the items being sold is “Taxable”. When all items have been entered, on the next invoice line enter the subtotal item. This will total all the lines above it. In the example below the total is $6,000.00. Under the subtotal, enter the Florida State Sales Tax item with the 6% rate. This will charge the correct state rate on all items sold.

Underneath that line, enter the Florida Capped Sales Tax with a 0% rate. You can then manually type in the capped amount of $75.00. QuickBooks will warn you that you should not change a sales tax rate but that is the purpose of this workaround so you can close the error message.

The invoice will now have the correct sales tax charged and it will flow through automatically to the correct liability account. There is no need for manual calculations on the invoice because the state rate will calculate automatically with the sales tax item used and the capped county surtax amount you already know is $75.00.

This is an example of an issue that it would be worth bringing to Intuit’s attention. Under the “Help” option on the grey menu bar there is an option to “Send Feedback Online”. You can ask for a capped sales tax procedure as a “Product Suggestion”. Intuit does listen to customers and if enough people bring an issue to them they will respond. This is why there are updates/patches during the year that you can download.

Review the samples below and if you have questions, please call any of our QuickBooks ProAdvisors at (850) 435-8300. If you have any other QuickBooks questions or problems we will be happy to help you solve them.

Example of an Invoice with Capped Sales tax amount:

Sales Tax Liability report:

**These tips are based on the 2011 version of QuickBooks.

New Legislative Alert - Deducting Bonuses

Background
Internal Revenue Code (IRC) S. 461 governs the timing of deduction for certain expenses incurred by accrual method taxpayers. A common expense for which many companies provide an accrual is incentive compensation. The IRS released Revenue Ruling 2011-29 on November 9, 2011, providing guidance on how a plan should be structured in order to permit a deduction in the year the services are provided.

S. 461 and its associated regulations require the following tests be considered in order to determine the timing of a deduction:

• All events must have occurred to establish the fact of the liability,

• The amount of the liability must be able to be determined with reasonable accuracy

• Economic performance must occur for the liability.

The economic performance rule as it relates to deductions for bonus payments, as defined in IRC S. 404, is straightforward. Regulations S.1.404(b)-1T prescribes that economic performance is deemed to occur in the current taxable year as long as payment is made by the 15th day of the 3rd month following such taxable year.

The New Ruling
The first test, in which all events must have occurred to establish the fact of the liability, is the focus of Rev. Rul. 2011-29. This has been a topic scrutinized in various court cases and previous Internal Revenue Service (IRS) rulings. The Washington Post Co. v. United States case allowed deduction of a bonus accrual even when the employer provided a general bonus accrual at the end of the year but did not specifically identify the bonus recipient and the amount payable to that particular recipient prior to the end of the taxable year. IRS Rev. Rul. 76-345 stated that the IRS would not follow the holding in that case. This suggested that individual recipients and the amounts payable to such recipient do need to be specifically identified prior to the end of the year in order for the all events test to be met. Rev. Rul. 2011-29 revokes Rev. Rul. 76-345.

The new ruling states that the following facts are now acceptable evidence to prove the all events test has been met in determining the timing of the deduction:

• The taxpayer’s liability to pay a minimum amount of bonuses to a group of eligible employees is fixed as the end of the year in which the services are rendered,

• The taxpayer is obligated under the program to pay the group the minimum amount of bonuses determined by the end of the taxable year, and

• Any bonus allocable to an employee who is not employed on the date on which bonuses are paid is reallocated to other eligible employees.

In order to satisfy the above conditions, the incentive compensation plan should specifically identify which employees are eligible to participate. The plan requirements should be communicated to eligible employees prior to the end of the taxable year. Lastly, the exact amount of the bonuses payable should be determinable through a formula in effect prior to the end of the taxable year. It is advisable that the plan be formally documented. If all the conditions noted further above are met, all events which fix the liability should be deemed to have occurred and the accrual should be determined with reasonable certainty. Provided the economic performance rule is also met, the tax deduction should be permitted in the year the services are provided.

Observation: Changes in a taxpayer’s treatment of bonuses to conform to this ruling constitute a change in accounting method under Revenue Procedure 2011-14. This procedure allows for an automatic accounting method change. An automatic change is permitted to be submitted with the taxpayer’s timely filed tax return, including extensions, and no user fee is required.

Limitation
A distinction should be noted with respect to bonuses paid to related parties. The related party rules under IRC S. 267 require the matching of income and deductions arising from transactions between related parties. Related parties include individuals owning more than 50% in value of the outstanding stock of the company. The law requires that even if all events have occurred to fix the liability and the economic performance rules are met, the deduction may not be claimed until the year in which the related party recognizes the income. Thus, in the instance of a bonus payment to a greater than 50% shareholder, the amounts will not be deductible by the company until the period in which the income is recognized by the shareholder.

QuickBooks Tips & Tricks: How can I change the look of the forms in QuickBooks?

Intuit has updated the way you can customize forms in QuickBooks.  You now have two options for customization that you can use together to make changes to your forms.

If you choose the second option, “Customize Data Layout”, it will take you to the customization options you are used to seeing in QuickBooks as shown below.

The viewing pane on the left allows you to select the fields that will appear on your form either on-screen and/or on the printed form. For example, on the screen shot above, the “REP” field is selected only to show on the screen. This field will only be visible when you are filling out the invoice. It will not print on the hard copy of the invoice itself. This allows you to specify what your customer sees and reduces the clutter on the form.

 The second tab allows you to select which columns will appear on screen or on the form. You can also change the default title for fields such as “service date” to “serviced”. The order column determines the position of each column on the form. The item field is selected to show only on-screen so the first printed column on the hard copy of the invoice is the “description”.

The “Prog Cols” and “Footer” tab provide the same print and order option for Estimates, Sales Orders and the Footer.

On the final tab you can set printing options for the form. The default is to use the settings from the Printer Setup but you can choose to set a different orientation, copies etc. for this form including customizing the paper size.

The Basic Customization screen options allow you to change the font for field descriptions; apply a color scheme and select which company and transaction information will print on the form.

By selecting the Layout Designer button on the bottom of the screen, a window opens that shows the invoice as a grid with the fields currently used positioned on the grid as they appear when printed. 

You can move, resize or delete the fields by selecting them one at a time; or clicking into the grid and holding the left mouse button down, then circling the fields you want to modify. When you release the mouse button the circled fields will be selected. You can move them as a group to another position on the form or delete them.

 If you select the first customization option, “Create New Design” this will take you to the Intuit on-line QuickBooks Forms Customization. This expands your customization options. You can add a company logo or select a background as well as upload your own personal background.

Step two will customize the colors, fonts and company information that displays as shown below.

Step three customizes the grid style for your form and how it will print on the hard copy. 

 

Step four shows the final result of your customizations.  At this point you can confirm the final copy and apply it to your form.  It will require you to sign in with the username and password you set up for your Intuit account when you installed the software.

The advantage to using this customization option is that you have many more choices available on-line from Intuit and from other users like you who are happy to share their set up.

 If you would like help on setting up these forms, please call any of our QuickBooks ProAdvisors at (850) 435-8300. If you have any other QuickBooks questions or problems we will be happy to help you solve them.


**These tips are based on the 2012 version of QuickBooks.

Legislative Alert: Details on Form PF

On October 26, 2011 the Securities and Exchange Commission (the “SEC”) voted and approved a new rule requiring investment advisors to report information about their private funds to the SEC. The rule, which implements Sections 404 and 406 of the Dodd-Frank Act, requires SEC-registered investment advisors with at least $150 million in private fund assets under management to periodically file a new reporting form (Form PF).

Under the rule, private fund advisors are divided by size into two broad groups, large fund advisors and smaller fund advisors. Large private fund advisors are i) those with at least $1.5 billion in assets under management attributable to hedge funds; ii) liquidity fund advisors with at least $1 billion in combined assets under management attributable to liquidity funds and registered money market funds; and iii) advisors with at least $2 billion in assets under management attributable to private equity funds. All other registered private fund advisors are considered smaller fund advisors.

The advisors group classification will determine the information and the frequency of reporting required of the advisor.

Large fund advisors will provide more information than smaller fund advisors, and the frequency of reporting depends on the type of fund the advisor manages. Large hedge fund advisors must file Form PF within 60 days of the end of each fiscal quarter. Large liquidity fund advisors must file Form PF within 15 days of the end of each fiscal quarter. Large private equity fund advisors must file Form PF annually within 120 days of the end of the fiscal year.

Smaller private fund advisors must file Form PF annually with 120 days of the end of the fiscal year.
Compliance with the Form PF filing requirements will have a two-stage phase-in period. The initial Form PF for private fund advisors with at least $5 billion in assets under management must be filed 60 days after the first fiscal quarter (or fiscal year) ending June 15, 2012. Large hedge fund advisors who have assets under management greater than $1.5 billion but less than $5 billion will be required to file their initial Form PF 60 days after 2012. Smaller hedge fund advisers and private equity advisors will be required to file their initial Form PF 120 days after the end of 2012.

Under the current proposal, Form PF requires smaller fund advisors to report only basic information regarding the private funds they advise. Smaller fund advisors are required to provide information regarding size, leverage, investor types and concentration, liquidity, fund performance, fund strategy, counter party credit risk, and use of trading and clearing mechanisms.

Large hedge fund advisors must report the basic information as required for smaller fund advisors and on an aggregate basis provide information regarding exposure by asset class, geographical concentration, and turnover by asset class. In addition, large hedge fund advisors who manage funds with at least $500 million in net asset value must provide certain information relating the individual fund’s exposures, leverage, risk profile, and liquidity.

Large private equity fund advisors must provide information regarding leverage used by their funds’ portfolio companies, use of bridge financing, and their funds’ investments in financial institutions.

Based on the proposed reporting requirement, fund advisors should contact their attorneys, auditors, prime brokers and administrators to discuss the information that these service providers have available to complete Form PF. For example, the information disclosed in the funds financial statements and tax returns can be used to meet the requirements of Form PF.

For more information, please contact Saltmarsh, Cleaveland & Gund at (850) 435-8300.

© 2011 EisnerAmper LLP

SEC Provides Disclosure Guidance Relating to Cybersecurity Risk Disclosure

In today’s day and age, it’s hard to imagine any company that is not using the internet or internal technology to drive their business. However, companies, their boards and shareholders may not always understand the full extent of the risk that lies in that technology. Prompted by the irrefutable amount of attention to high-profile cybersecurity incidents, the Division of Corporate Finance of the Securities and Exchange Commission has focused on this issue and recently provided their views on registrants’ cyber risk disclosure obligations.

The Division states, “Registrants should disclose the risk of cyber incidents if these issues are among the most significant factors that make an investment in the company speculative or risky.”

Why is cybersecurity such a critical issue?
Virtually all activities today rely on computers and the internet – communication (internet, smartphones), shopping (online stores, credit cards), personal records (medical, employee and customer information), accounting records, etc. Cybersecurity entails protecting this information by protecting from, detecting, and responding to attacks.

What risks and consequences do you need to consider?
The risks companies should consider are: 1) misappropriation of sensitive data including proprietary information, 2) corrupted data and 3) operational disruption. These may be carried out by someone gaining unauthorized access or causing processing disruptions. Attacks may lead to consequences such as additional costs, lost revenues, litigation as well as reputational damage.

Which companies are most at risk?
Everyone who maintains data in an electronic environment. Zeena Patel, a leader in EisnerAmper’s Technology Audit and Advisory Services group, notes: “The Division was prompted to provide their views when several large companies were involved in significant attacks. However, data shows that criminals are just as likely to invade smaller and medium-sized organizations who may not have the resources to detect and prevent attacks quickly.”

What disclosures may be required?
The guidance, which does not change the existing rules and regulations, requires companies to disclose any aspects of a company’s business that could have material costs and consequences.

A significant attack, or high risk of attacks (even if currently undetected), may require quantitative and qualitative information within the “Risk Factor” disclosure.

Further consideration must also be given as to the inclusion of costs and consequences in Management’s Discussion and Analysis and Financial Statements.

Lastly, further, lacking operating cybersecurity controls may lead to ineffective Disclosure Controls and Procedures.

How should companies respond to the guidance?
Zeena further states: “Companies should be preparing a risk assessment which also includes third-party providers. Understanding the magnitude and likelihood of potential attack within your current controls will allow you to determine your disclosure requirements.”

The guidance can be found at http://www.sec.gov/divisions/corpfin/guidance/cfguidance-topic2.htm

For more information, please contact  Saltmarsh, Cleaveland & Gund, (850) 435-8300.

© 2011 EisnerAmper LLP

QuickBooks Tips & Tricks: How do I get the technical information on my QuickBooks installation?

There are two screens accessible from within QuickBooks that will provide the technical information on your installation.  The first is the Product Information Screen.  You can access this screen by pressing the “F2” function key on your keyboard while in QuickBooks.  The following Product Information will come up:

This screen will provide you with your registration and product numbers for the installation.  It will also record all the release updates that are installed from the first to the latest.  These are the Automatic Updates Intuit periodically sends.  When there is a new release available, at your next logon to QuickBooks you will receive a message that there is an update to install.  It is a good idea to install these updates as they are provided to fix problems that users like you bring to Intuit’s attention.  All during the year Intuit is reviewing and testing the current version of QuickBooks to make sure it provides the best features to help you in your business.  These updates are valuable tools to help you keep QuickBooks functioning at its best.

The second screen to provide technical information is the Tech Help screen.  You can access this information by first bringing up the Product Information screen from the F2 function screen.  When that opens, press your F3 function key and the following Tech Help screen appears.

The first screen will give you the system information for this installation of QuickBooks.  This will be helpful when you call our QuickBooks Pro-advisors for support.  Software processing is very dependent on the surrounding hardware and operating system environment.  When problems come up it is essential to have as much information available to help solve the problem.  The other tabs on this screen provide additional information to help with your support as well.

One of the most important screens is accessed by the Open File tab.  This gives you access to various log files generated as you process your work in QuickBooks.  If you receive an error message or you are having problems with transactions this screen will provide event information on what happened and when.  The “QBWIN.LOG” file shown below will open as a text file and lists any exceptions that occurred during processing.

For more information and help on the technical side of QuickBooks, please call one of our QuickBooks Pro-advisors at (850) 435-8300. We will be happy to help keep your QuickBooks processing smooth.