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We’ve Re-branded: What Does this Mean for You?

by | Feb 3, 2023 | Announcement, Business Advisory

We’ve Re-branded: What Does this Mean for You?

We’ve rebranded FMA, C.P.A as Business Advisory and Accounting Partners. But what does this mean for you, why change our brand, and where are we headed?

We’ve made some positive changes in the firm over the last few years. These changes are all part of our goal to make us more valuable to our clients, business owners, and real estate investors, as well as our individual clients with complex planning needs.

We’d love to opportunity to tell you more about how and why our rebranding came about and to explain why our clients helped to shape our new direction.

Why re-brand the firm?

The name Business Advisory and Accounting Partners (B.A.A.P) more accurately reflects the future direction of our firm. Traditionally in the accounting field, a firm would use the initials of the managing partner in the firm’s name. We think it’s time for a change.

So, two years ago we officially changed the name to B.A.A.P, and it’s time now to fully commit to the brand and remove the FMA, C.P.A name. 

One question we get asked is if it’s an indication of ownership change now or in the foreseeable future, and the answer to that is no. 

So, how do these changes affect our clients?

It’s business as usual, folks. You can expect the same commitment and attention to detail that we pride ourselves on. The partners (Mark, Rose, Lisa, and Jensen) are fully committed to providing valuable planning and high-quality services to our existing and future clients. 

What about the website and emails?

You’ll notice that we’re using the new business name Business Advisory and Accounting Partners in our communications to you.

We’ve secured the new domain busadvisory.com and we’ll be transitioning the website and email addresses to this new domain. The old fma-cpa.com domain and email addresses associated with that domain will still work, and both email addresses will for the foreseeable future. 

To make sure that our emails reach your inbox, you can check your spam filtering, and whitelist the new domain.

Our past and our future

We’re proud of our experience – it makes us experts. We’ve been helping business owners and real estate investors with their tax planning needs since 1989. 

In 2014, Mark took over as managing partner of the firm and became more active in an industry-wide thought leadership role within the Thomson Reuters Tax and Accounting division. He has had the pleasure of interacting with and training many CPA firms on offering advisory services to clients. 

Over the years we’ve heard a consistent message from small business owners: they need more from their accountants. They need guidance and support to help make better financial decisions and run their business more efficiently. We listened to this message and remodeled our firm around business planning and guidance. We don’t just record what happened in the past. 

Following that ethos has made us leaders in this industry and we’re excited to see what the future brings – for us and our clients. 

The next step

This is a great opportunity to say thank you to our clients – without their support, we wouldn’t have been able to achieve all that we have. We believe in long-term relationships, and when we partner with you, we’re in it for the long haul. 

We help business owners get organized, more efficient, and more strategic in the way they manage their businesses. Ask us about our solutions: compliance services,  tax efficiency, organizational services, and financial strategies.

To learn more about our work and to schedule a free strategy session, get in touch. Our door is open, and we look forward to hearing from you.  

 

 

 

BAAP Financial Statements

BAAP Financial Statements

by | Feb 2, 2023 | Business Advisory

When it Comes to Understanding Financial Statements, We’ve Got the Key

For every business owner, understanding your financial statement is a necessity. And if you’re like many people, financial statements can look like a headache.

At Business Advisory and Accountancy Partners, we’re here to tell you that if you’re feeling locked out when it comes to understanding financial statements, we’ve got the key.

Let’s get to grips with financial statements and get an understanding of balance sheets and income statements.

What is a financial statement?

Financial statements are accounting reports that summarize a business’ activities over a period. Overall, they provide the business lenders, investors, and creditors with an idea of the business’s financial health, financial performance, operations, and cash flow. They provide key information about the company’s revenue, expenses, profitability, and debt.

Often financial statements are used to ensure accuracy for purposes of tax, financing, or investing. Financial statements are useful if you’re looking for investors, or if you want to apply for credit.

There are different types of financial statements – typically they are the balance sheet, the income statement, the cash flow statement, and the statement of the owner’s equity.

Let’s explore exactly how they work. Firstly, the one key thing to get your head around is:

What the business owns is equal to what the business owes.

A business owns assets, and a business owes liabilities to third parties and equity to those who own the business.

In other words, assets = liabilities + equity. This is known as the accounting equation. Once you’ve grasped this, you’re well on your way to understanding financial statements.

Balance sheets and income statements

The equal sign that we mentioned above is important because you must remember that the assets must always balance liabilities and equity. When you look at a business’ accounting equation at a particular point in time, this is known as a balance sheet.  It’s like a snapshot of the business’ assets, liabilities, and equity. This is a summary of what the business owes and owns on a certain date.

Now for the income statement. To understand this, we need to know that equity is made up of capital contributions (the cash or assets invested into a business by an owner in exchange for a share of equity). The income statement summarises the business’ revenues and expenses over a period.

We also need to understand the business’ retained earnings (the business’ accumulated profits that they hold onto for the future.) It’s what is left over after the business has added up all the profit that the business has generated and takes away what has been withdrawn by the owners. Retained earnings are made up of opening retained earnings plus current-year profits minus current-year withdrawals.

Opening the door to your financial success

As a business owner, you’ve invested heavily in the company and deserve a good rate of return. Trust us – some basic knowledge of tax and financial compliance goes a long way, helping you to open doors to a successful future.

As your business advisors, we are here to guide you. You can talk to us about the often complex world of business strategy, tax management, accountancy, and financial advice. We specialize in everything from basic compliance to business advisory services, and from advanced tax planning to business exit planning.

When looking towards the future direction of your business it’s important to have an expert to advise you. We partner with companies to establish long-term rewarding business relationships. Let’s sit down together at a free strategy session to discuss your financial goals.

 

 

Setting Up a Business? Let’s Talk About Business Structure & Entity Planning

Setting Up a Business? Let’s Talk About Business Structure & Entity Planning

by | Dec 28, 2022 | Business

So, you’ve decided to ditch the employee badge and become your own boss. Good for you. But now that you’re taking that big, bold, leap, have you weighed up the business structure options? 

When you’re a business owner, you’re always trying to see around the next corner. Choosing the right business structure is one of the most important decisions you’ll make in the early days of your company. So, take the time to learn what the business structure options are, which is best for your business, and why. 

As always, At FMA, C.P.A. we’re happy to explain it all…

What is a business legal structure?

A business legal structure is also known as a business entity, and it’s a government classification that regulates some aspects of a business. On a state level, it determines the liability, and at a federal level, it determines the tax burden. 

The most common types of business structures are sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and cooperatives. 

Why is choosing the right business structure important?

Making sure that you choose the right legal business structure is an important step because there are certain consequences to consider: It will determine your tax rate, paperwork and management requirements, fundraising abilities, and more.

  • Tax: some businesses (sole proprietors, partnerships, and S corporations) will class their business income as personal income. Others (C corporations) class their business income as separate from the owner’s personal income. Your choice of structure will impact your tax burden. 
  • Liability: The business structure determines if your business faces liability if it ever faced a lawsuit. Some options (sole proprietorships and partnerships) are pretty easy to start however they may lack protection. Others (corporations) may be trickier to start but offer more liability protection. 
  • Paperwork: each of the business structure types has different requirements when it comes to filing tax forms. Corporations are required to submit articles of incorporation and government reports.

There are other consequences such as hierarchy, registration, and fundraising – all depending on which business structure you chose. 

Factors to consider

It’s not always obvious which business structure to choose when you start a business, so it’s a good idea to meet with an expert to weigh up the options, give it careful analysis, and look at the long-term consequences. 

Bear in mind also that if you feel that your initial choice of business structure was a mistake, you can change your business structure in the future. 

The factors you and your advisor should weigh up include:

  • Tax implications
  • The future direction of your business
  • The operational complexity of your business
  • The level of control you need
  • Whether you’ll obtain capital investment
  • The protection the business needs against lawsuits
  • Licenses, permits, and regulations

Business strategy gold

Make sure that your business is benefiting from its structure and maximizing its profits. 

Talk to the seasoned tax experts. We want your business to flourish, and avoid the tripwires. We work with clients in the Tampa Bay area to assess the ideal business structure needed to maximize cash flow. It’s all about weighing up the operational and tax considerations and minimizing the risk exposure.

At FMA, C.P.A. we are your business advisors. This means that we’re the ones to talk to about all things business strategy, tax management, accountancy, and financial advice. The testimonials, written by the business owners that we have worked with, show that with our guidance, a business can go from surviving to thriving.

It all starts with us sitting down together at a free strategy session. So, let’s dive in!

Getting to Know the Basics of Tax Efficiency

Getting to Know the Basics of Tax Efficiency

by | Oct 14, 2022 | Tips

The word ‘tax’ has a strange effect on people. Some find it boring; others find it confusing, and many find it scary.

Yet knowing the basics of tax is essential for your business to run smoothly and efficiently and be fully compliant. As a business owner, it’s your responsibility to ensure that proper books and records are kept, that your business is tax compliant, and that tax returns are completed. Failure to do so can result in serious consequences.

There is a lot to understand, but the team at FMA, CPA are seasoned tax professionals and are here to help. Let’s get to know the basics of tax efficiency. +We’ll start with common terms like gross income, deductions, and taxable income, then look at how taxes are calculated.

Common tax terms

1. Your gross income means your wages, interest, dividends, business income, prizes, awards, gain from the sale of stock or property, etc. In other words, gross income is all income from whatever source derived, and it includes amounts realized in any form whether money, property, or services, unless provided by law. A good rule of thumb is that everything is taxable unless the law states that it’s not. Some good examples of things not taxable include gifts and inheritance, scholarships, life insurance proceeds, and most disability income.
2. Deductions refer to business expenses/ deductions, and personal deductions such as state income taxes, mortgage interest, charitable contributions, student loan interest, etc.
3. Your taxable income is what your tax is calculated on, so it’s your gross income minus all of the deductions allowed. This is the number that your tax liability is calculated on.

So, how are taxes calculated?

Here in the US, we’ve got what’s called a progressive individual tax system, which means that all income is not taxed at the same rate. Higher levels of income are taxed at a higher rate, and lower levels of income are taxed at a lower rate.

There are tax brackets, and any income within this bracket is taxed at a particular rate. You’ve got your ‘marginal tax rate’ which is the rate that your next $1 will be taxed, and you’ve got your ‘effective tax rate’ which is the overall tax rate you’re paying on all of your income.

Remember, tax rates differ for ‘individuals’ and those who are ‘married filing jointly’. Also worth noting is that state income tax differs in every state, with some having a progressive system, others a flat tax, and a few with no state income tax.

What other tax should you know about?

1. You’ll pay capital gains tax on the sale of investments and real estate, and this is taxed at lower preferential rates.
2. Single people earning over $125,000 or married people earning $250,000 will have an additional 3.8% tax applied to all investment income. This is called net investment tax.
3. Self-employment tax is where social security or Medicare taxes are applied to all self-employed income or profits.

Tax efficiency

Tax planning focuses on ensuring that you pay no more than your fair share of taxes. The goal of tax planning is to increase tax efficiency and reduce the overall effective tax rate paid on the business’s gross income.

So, if optimizing your business income, maximizing deductions and credits, and minimizing self-employment taxes sound good, we’re happy to help you achieve this.

As experts in business tax management, accountancy services, financial statement preparation, and financial advice, we can guide you. We’ll be proud to be your business advisors. We can answer all of your questions and help you to unlock the potential of your business.

We serve the Tampa Bay Area, and our clients know that they’re in good hands to manage all of their business tax needs and more. Let’s start with a free strategy session.

Is Your Pastime a Hobby or a Business? 11 Factors to Consider

Is Your Pastime a Hobby or a Business? 11 Factors to Consider

by | Sep 6, 2022 | Business

What do you do with your downtime? Most of us have a pastime, whether it’s baking, home maintenance, or crafting.

But how do you know if it’s a hobby or a business? And does it matter?

The thing about a business versus a hobby is that with a business you have tax, insurance, and legal obligations.

Suddenly, that little side hustle seems a little more complicated than you’d previously thought. Well, don’t worry. FMA, C.P.A. can explain the difference between a hobby and a business, reveal the top things to consider, and advise on what steps to take.

How to spot the difference

The golden rule is that an activity is considered a business if you pursue it with continuity and regularity, and your primary purpose is to generate income or profit.

The IRS said that “A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business intending to make a profit. Many people engage in hobby activities that turn into a source of income.”

Now that we know the difference, let’s look at 11 factors that taxpayers must consider when determining their activity to be a hobby or a business, according to the IRS.

11 Factors to consider

  • The taxpayer carries out activity in a business-like manner and maintains complete and accurate books and records.
  • The taxpayer puts time and effort into the activity to show they intend to make it profitable.
  • The taxpayer depends on income from the activity for their livelihood.
  • The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation.
  • The taxpayer has enough income from other sources to fund the activity.
  • Losses are due to circumstances beyond the taxpayer’s control or are normal for the start-up phase of their type of business.
  • There is a change in methods of operation to improve profitability.
  • The taxpayer and their advisor have the knowledge needed to carry out the activity as a successful business.
  • The taxpayer was successful in making a profit in similar activities in the past.
  • The activity makes a profit in some years and how much profit it makes.
  • The taxpayer can expect to make a future profit from the appreciation of the assets used in the activity.

Let’s remember that all of the above factors, facts, and circumstances relating to the activity must be considered, with no factor being more important than the other.

You must declare all income

It’s important to understand that if you make an income from an activity that’s completed with no intention of making a profit, you must report the income you receive.

The IRS state that “whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies on next year’s tax return.”

A partner in your business growth

The area of tax can be complicated. If you need more guidance, we can happily answer all of your questions.

We serve the Tampa Bay Area and specialize in tax management, accountancy services, financial statement preparation, and financial advice. We help our clients to reach their future goals by becoming better organized and more efficient in managing the financial aspects of their business.

We believe that it’s all about tax planning, not tax preparing. Let’s set up a free strategy session to talk about what steps you can take to ensure a compliant and secure financial future.

We’re your business advisors, and we’re ready to unlock the potential of your business.