Accounting Firm Explainer: Tennessee Business Tax Changes

Small businesses in Nashville and other parts of the state are ready to feel the relief provided by the modified Tennessee Works Tax Act. Announced in early 2023, some of the legislative changes start to apply this year. They’re said to be part of the biggest tax cut in the history of the state. 

If you need a last-minute guide to the updated law, this accounting firm explainer discusses the most relevant points for small business owners.

Filing Exemptions

The business tax filing threshold has been increased from $10,000 to $100,000 per jurisdiction. This means that businesses with annual gross sales of less than $100,000 are now exempt from filing an annual return. The Department of Revenue estimates that over 100,000 businesses are affected and are encouraging owners to take advantage of this major change. 

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Straight from a CPA: How to Avoid a Small Business Tax Audit

No business owner wants to deal with an IRS audit. While the chances of being selected for one are slim, they’re not zero. Some audits are random, while others stem from red flags on the taxpayer’s return. Auditors also have three years from the time a tax return was submitted to trigger the process.

Simple calculation mistakes, overestimated deductions, and even a missed signature can already sound the alarm for an audit. Fortunately, there are ways to further reduce the odds of being chosen as a subject. The following are what a CPA considers good tax practices that will keep the IRS off your back.

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A Startup’s Guide: Moving from Cash-Based to Accrual Accounting

Most startups tend to choose cash-based accounting in the early stages of the business. This is primarily because recording income as it comes in is straightforward and easy to understand. While there is nothing wrong with this, businesses that have been around for a while and are starting to expand may face issues with cash-based accounting.

The limitations of cash-based accounting become increasingly apparent as startups grow and their financial operations become more complex. For instance, it can be challenging to track payables and receivables effectively, or to accurately assess the company’s long-term financial health. Additionally, cash-based accounting does not meet reporting requirements for businesses with more than $25 million in revenue within a timespan of three consecutive years.

To address these challenges, many startups consider transitioning to accrual accounting with the help of a trusted CPA firm.

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Navigating the 2024 Tax Season: Tips from a Pro Accounting Firm

The 2024 tax season in Nashville, like most of the country, kicks off later this month. If you’re just now getting around to the prep work for filing your taxes, it’s already cutting it close. While the April 15 deadline may still seem far-off, an accounting firm will advise you to get started as early as you can. Any extra time you can devote to your taxes goes a long way in ensuring you make it through the season unscathed.

Ready to roll up your sleeves and take on this task? Below are some tips for a less stressful tax filing experience.

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Delegate to Elevate: Why You Should Outsource Payroll to a CPA Firm

Payroll processing might be a fact for any kind of business, but the burden of this crucial function can be overwhelming for small business owners. Doing it themselves means an additional task to juggle along with everything else, while hiring full-time staff for it leads to expenses for which they might not be prepared.

This is the primary reason why there is a significant number of small businesses now using external payroll services, with the market projected to grow even more in the coming years. If you’re facing the same administrative challenges in your Nashville business, it’s the best time to consider hiring a CPA firm to help you manage this part of your operations.

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How a CPA Firm Can Help You Plan for Early Retirement Properly

Many younger Americans are beginning to consider early retirement as an ideal financial goal. In fact, a survey from T. Rowe Price showed that 43 percent of millennials plan to retire before the age of 65.

With the recent surge in early retirement trends, many are wondering how best to navigate this complex financial landscape. This is where working together with a CPA firm comes into play, as these professionals can offer invaluable advice and assistance in planning for early retirement.

The Role of a CPA Firm in Early Retirement Planning

Retiring early requires a deep understanding of financial management, and a certified public accountant can help you navigate these waters. With their accounting and financial insights, a CPA can help you design an effective budget plan that factors in your current income, projected post-retirement income, and anticipated expenses.

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LLC or S Corporation? Ask a Nashville Accounting Firm for Advice

As a soon-to-be small business owner in Nashville, you may find yourself at the crossroads of choosing the right business structure. Typically, small business owners will have two options to choose from: Limited Liability Company (LLC) or Subchapter Corporation (S Corporation). It’s an important decision, as any reputable accounting firm will tell you, since your choice will have different accounting, tax, and legal implications.

The LLC Option

An LLC offers flexibility, ease of management, and legal protection. With LLC, your personal assets are shielded from business debts and liabilities. This is vital if a lawsuit ever arises. From an accounting perspective, an LLC is simpler to manage. There’s no need for a board of directors or annual meetings, which can save you time and resources.

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Consult Your CPA About the Sales Tax Nexus and How You Can Navigate It

Are you operating an online business out of Nashville? In today’s digital world, the opportunities in online retail are abundant, but so are the complexities of e-commerce accounting and taxation. 

One crucial area you have to understand is the concept of sales tax nexus and the local regulations related to it. Seeking professional assistance from your CPA is essential in navigating this nuanced e-commerce regulation and ensuring your businesses remain compliant while optimizing your financial strategies.

Here’s a look at what the sales tax nexus in Nashville is all about and how you can successfully navigate it. 

What is sales tax nexus?

Sales tax nexus refers to the connection between a business and a state that triggers the obligation to collect and remit sales tax on sales made within that state.

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Ask Your CPA Firm: What Could Be Causing Your Cash Flow Problems?

A healthy cash flow is essential to any small business in Nashville. If you’re having difficulty with yours, a CPA firm can help you get to the root cause of the problem and recommend the most appropriate solutions.

Here are the potential reasons behind a cash flow problem and how your accountant can help you address them:

1. Insufficient sales or revenue

If your business is not generating enough sales or revenue, there won’t be enough cash coming into the company to cover expenses and financial obligations. In some cases, your sales volume may seem good but your bottom line shows a very thin or even negative margin. 

Your accountant can play a vital role in helping you improve sales or revenue by providing financial insights, analysis, and strategic advice.

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Ask Your Accounting Firm About Using Cloud Solutions for Your Business

Running a small business in Nashville can be highly fulfilling — but it is also not a walk in the park. This is why outsourcing basic accounting tasks such as bookkeeping and payroll management to an accounting firm is beneficial. It allows you to spend the bulk of your time in building your enterprise and focusing on your business’ core activities.

If you want better control over your finances, however, cloud accounting solutions may be the right option for you. Cloud accounting solutions refer to the use of web-based software and services for managing accounting and financial tasks. Some of the top software on the market can be found here.

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