Defrauded? How to Help your Nonprofit Recover | CPAs in Baltimore City | Weyrich, Cronin & Sorra

Defrauded? How to Help your Nonprofit Recover

Thousands of not-for-profit organizations fall victim to embezzlement schemes every year — some even losing millions of dollars. But losses go beyond actual dollar amounts. The hit to a group’s reputation may scare off donors, grantmakers and other supporters. However, with the right response, nonprofits can bounce back from fraud. Here’s how.

One best practice

A study published in the Journal of Accounting, Ethics & Public Policy makes the case that the specific steps an organization takes following a fraud incident can mitigate significant reputational damage. In its hypothetical example, the study lists several ways a nonprofit might act after discovering money has been embezzled:

  • Make a formal apology,
  • Undergo an external audit,
  • Improve the board of directors’ oversight function,
  • Pursue legal action against the guilty party,
  • Improve internal controls, and
  • Terminate the executive director.

The study found that improving board oversight was the only response to elicit a statistically significant positive effect on supporters’ intentions to donate. Stronger oversight also helped restore an organization’s perceived trustworthiness.

To signal improved board oversight to would-be donors, the authors suggested that an embezzled organization start requiring board members to be completely independent from management and bar employees from serving on the board. Researchers also informed study participants that a nonprofit should increase the number of voting board members and mandate that at least one member has a financial or accounting background. Participants were further told that all board members must review the financial statements at least monthly.

Comply with regulations

The study’s authors call improving board oversight “an ideal image repair strategy” because it comes at a relatively low cost. But while reputational repair is of utmost importance, it’s not the only consideration for victimized nonprofits. If your nonprofit loses funds to fraud, it must comply with federal and state reporting obligations, too.

The IRS generally requires organizations to report any “significant diversion” of assets on Form 990. A significant diversion happens when the gross amount of all diversions discovered during the tax year exceeds the lesser of 1) 5% of gross receipts for the year, 2) 5% of total assets at year end or 3) $250,000. Check with your state for other required reporting.

Act now

You may be able to save yourself a lot of heartache by preventing rogue employees from committing fraud in the first place. Tighten internal controls and board oversight now. And just in case a criminal slips through the cracks, be ready with a fraud contingency plan that can guide you in the aftermath of an incident.

Contact us for help with controls or to investigate fraud.

© 2021

 

Home sales: How to determine your “basis” | Tax Preparation in Harford County | Weyrich, Cronin & Sorra

Home sales: How to determine your “basis”

The housing market in many parts of the country is strong this spring. If you’re buying or selling a home, you should know how to determine your “basis.”

How it Works

You can claim an itemized deduction on your tax return for real estate taxes and home mortgage interest. Most other home ownership costs can’t be deducted currently. However, these costs may increase your home’s “basis” (your cost for tax purposes). And a higher basis can save taxes when you sell.

The law allows an exclusion from income for all or part of the gain realized on the sale of your home. The general exclusion limit is $250,000 ($500,000 for married taxpayers). You may feel the exclusion amount makes keeping track of the basis relatively unimportant. Many homes today sell for less than $500,000. However, that reasoning doesn’t take into account what may happen in the future. If history is any indication, a home that’s owned for 20 or 30 years appreciates greatly. Thus, you want your basis to be as high as possible in order to avoid or reduce the tax that may result when you eventually sell.

Good Recordkeeping

To prove the amount of your basis, keep accurate records of your purchase price, closing costs, and other expenses that increase your basis. Save receipts and other records for improvements and additions you make to the home. When you eventually sell, your basis will establish the amount of your gain. Keep the supporting documentation for at least three years after you file your return for the sale year.

Start with the Home Purchase Price

The main element in your home’s basis is the purchase price. This includes your down payment and any debt, such as a mortgage. It also includes certain settlement or closing costs. If you had your house built on land you own, your basis is the cost of the land plus certain costs to complete the house.

You add to the cost of your home expenses that you paid in connection with the purchase, including attorney’s fees, abstract fees, owner’s title insurance, recording fees and transfer taxes. The basis of your home is affected by expenses after a casualty to restore damaged property and depreciation if you used your home for business or rental purposes,

Over time, you may make additions and improvements to your home. Add the cost of these improvements to your basis. Improvements that add to your home’s basis include:

  • A room addition,
  • Finishing the basement,
  • A fence,
  • Storm windows or doors,
  • A new heating or central air conditioning system,
  • Flooring,
  • A new roof, and
  • Driveway paving.

Home expenses that don’t add much to the value or the property’s life are considered repairs, not improvements. Therefore, you can’t add them to the property’s basis. Repairs include painting, fixing gutters, repairing leaks and replacing broken windows. However, an entire job is considered an improvement if items that would otherwise be considered repairs are done as part of extensive remodeling.

The cost of appliances purchased for your home generally don’t add to your basis unless they are considered attached to the house. Thus, the cost of a built-in oven or range would increase basis. But an appliance that can be easily removed wouldn’t.

Plan for Best Results

Other rules and requirements may apply. We can help you plan for the best tax results involving your home’s basis. Contact us today!

© 2021

 

Building Customers’ Trust in your Business' Website | Accountants in Harford County | Weyrich, Cronin & Sorra

Building Customers’ Trust in your Business’ Website

The events of the past year have taught business owners many important lessons. One of them is that, when a crisis hits, customers turn on their computers and look to their phones. According to one analysis of U.S. Department of Commerce data, consumers spent $347.26 billion online with U.S. retailers in the first half of 2020 — that’s a 30.1% increase from the same period in 2019.

Although online spending moderated a bit as the year went on, the fact remains that people’s expectations of most companies’ websites have soared. In fact, a June 2020 report by software giant Adobe indicated that the pandemic has markedly accelerated the growth of e-commerce — quite possibly by years, not just months.

Whether you sell directly to the buying public or engage primarily in B2B transactions, building customers’ trust in your website is more important than ever.

Identify yourself

Among the simplest ways to establish trust with customers and prospects is to convey to them that you’re a bona fide business staffed by actual human beings.

Include an “About Us” page with the names, photos and short bios of the owner(s), executives and key staff members. Doing so will help make the site friendlier and more relatable. You don’t want to look anonymous — it makes customers suspicious and less likely to buy.

Beyond that, be sure to clearly provide contact info. This includes a phone number and email address, hours of operation (including time zone), and your mailing address. If you’re a small business, use a street address if possible. Some companies won’t deliver to a P.O. box, and some customers won’t buy if you use one.

Keep contact links easy to find. No one wants to search all over a site looking for a way to get in touch with someone at the business. Include at least one contact link on every page.

Add trust elements

Another increasingly critical feature of business websites is “trust elements.” Examples include:

  • Icons of widely used payment security providers such as PayPal, Verisign and Visa,
  • A variety of payment alternatives, as well as free shipping or lower shipping costs for certain orders, and
  • Professionally coded, aesthetically pleasing and up-to-date layout and graphics.

Check and double-check the spelling and grammar used on your site. Remember, one of the hallmarks of many Internet scams is sloppy or nonsensical use of language.

Also, regularly check all links. Nothing sends a customer off to a competitor more quickly than the frustration of encountering nonfunctioning links. Such problems may also lead visitors to think they’ve been hacked.

Abide by the fundamentals

Of course, the cybersecurity of any business website begins (and some would say ends) with fundamental elements such as a responsible provider, firewalls, encryption software and proper password use. Nonetheless, how you design, maintain and update your site will likely have a substantial effect on your company’s profitability.

Contact us for help measuring and assessing the impact of e-commerce on your business.

© 2021

 

bFile System Ready for RELIEF Act Sales & Use Tax Credit | CPA in Harford County | Weyrich, Cronin & Sorra

bFile System Ready for RELIEF Act Sales & Use Tax Credit

Maryland Comptroller Peter Franchot announced on Tuesday, May 18th that the State’s bFile system is now available for qualified business owners to claim a Sales and Use Tax Credit under the Relief Act of 2021.

If vendors report $6,000 or less in gross collected sales tax in that period, $3,000 will be the tax credit. If less than $3,000 of sales tax was collected, the credit will be the amount of sales tax collected, bringing the balance owed for that period to zero.

To be eligible for the credit, business owners must file timely returns and sales collections for March, April and May cannot exceed $6,000. The returns are typically filed in April, May, and June. However, the filing deadline for those months have been extended to July 15, 2021.

Read More Here.

 

As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.

leasing standards | WCS in I-95 Business: New Leasing Standards are Here | Business Consulting and Accounting Services in Cecil County | Weyrich, Cronin & Sorra

WCS in I-95 Business: New Leasing Standards are Here

Principal Karen Dojan, CPA recently contributed to I-95 Business Magazine with a helpful article all about the new leasing standards established by the Accounting Standards Update. Read on for a snippet and link to her full article. As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.

 

“After several postponements, including a one-year COVID-19 extension, the much-anticipated leasing standards established by Accounting Standards Update (AS) NO. 2016-02, Leases are nearing their effective date for nonpublic companies and non-profits. The new accounting standard will become effective for fiscal years beginning after Dec. 15, 2021, essentially starting with calendar year 2022 financial statements.”………….Read More.

 

Free Webinar: Getting a 360° Perspective on your Business | CPAs in Harford County | Weyrich, Cronin & Sorra

Free Webinar: Getting a 360° Perspective on your Business

Join our very own GrowthWheel Certified Advisor – Joni Peebles, CPA as she hosts a FREE GrowthWheel webinar on key steps to growing your business Friday, May 7, 2021 from 1-3pm!

Please register here to reserve your spot and take the first step to improving your business!

Workshop: Getting a 360o Perspective on Your Business — Make decisions and plan actions for growth

This webinar is about addressing the four lasting challenges of any business and learning how to make a plan for growth. Join a group of fellow entrepreneurs, small business owners, and a GrowthWheel Certified Advisor in this 2 hour workshop about finding your biggest barriers to growth! Explore the options for improving your business concept, customer relations, organization, and operations.

Get to know the GrowthWheel 360° Perspective here.

Who should Attend?

  • This webinar is for startup and growth companies in all life stages and within all industries.

Purpose of the workshop:

  • Introduce the GrowthWheel concept for making business decisions
  • Determine current challenges and what you can do to overcome them
  • Learn the actions steps you can take to kick start the growth of your business
  • Make a plan to move forward

Takeaway from the workshop: When the workshop is over you will walk away with:

  • A tool stack to work with your growth plan
  • A 30-60-90 Days Action Plan for your next steps
  • Ideas and feedback from other entrepreneurs

 

If you have any questions please contact us!

American Rescue Plan: More Details on Tax Credits Available | Accountants in Cecil County | Weyrich, Cronin & Sorra

American Rescue Plan: More Details on Tax Credits Available

The IRS and Treasury Department announced today further details of tax credits available under the American Rescue Plan. These credits aim to help small businesses and include paid leave for employees receiving COVID-19 vaccinations.

The American Rescue Plans allows for small businesses to claim refundable tax credits that reimburse them for the cost of providing paid time off for employees receiving the vaccine, providing paid time off for anytime needed to recover for the vaccine and providing paid sick and family leave due to COVID-19.

News release IR-2021-90 details these credits here. You can also find even more in depth information on tax credits available to small employers on the fact sheet provided by the IRS.

 

As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.

digital sales tax | CPAs in Baltimore County | Weyrich, Cronin & Sorra

Maryland Sales and Use Tax on Digital Products

The Maryland legislation recently overrode Governor Hogan’s veto of House bill 932. The bill expands the current 6% sales and use tax to include the sale of digital products. Maryland recently published Business Tax Tip #29 Sales of Digital Products and Digital Code which gives a nonexclusive lists of possible digital products such as but not limited to:

  • A sale, subscription or license to access content online
  • A sale, subscription or license to use a software application
  • Photographs, artwork, illustrations, graphics and similar products

The release points out that the sales and use tax does not apply to the sale of a non-taxable service performed electronically unless the service results in a digital product. To view the Comptroller’s release click here.

For more details on the recent change to the sales and use tax rules please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.

A reminder that the Comptrollers Office Of Maryland recently extended the Sales and Use tax deadline for sales taking place in March, April, and May of 2021 to July 15, 2021.

 

tax deadline extended | accountants in Harford County | Weyrich, Cronin & Sorra

Tax Deadline for Individuals Extended to May 17th

The Treasury department and Internal revenue service announced that the federal income tax deadline for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. The IRS will be providing formal guidance in the coming days.

Individual taxpayers can also postpone federal income tax payments for the 2020 tax year due on April 15, 2021 to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax.  This relief does not apply to estimated tax payments that are due on April 15, 2021. These payments are still due on April 15.

The federal tax deadline postponement only applies to individual federal income returns and tax payments, not state tax payments. State filing and payment deadlines vary and are not always the same as the federal filing deadline. Maryland has already extended its filing deadline to July 15th. You can read more on Maryland’s decision to extend the deadline here.  For additional states, the IRS urges taxpayers to check with their state tax agencies for additional details.  

More information on the IRS’ decision can be found here.

As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.
maryland filing deadline | CPAs in Harford County | Weyrich, Cronin & Sorra

Comptroller Extends Maryland Income Tax Filing Deadline

Comptroller Peter Franchot announced that he is extending the state income tax filing deadline by three months to July 15, 2021. No interest or penalties will be assessed if returns are filed and taxes owed are paid by the new deadline.

This applies to individual, pass-through, fiduciary and corporate income tax returns, including first and second quarter estimated payments and is due to recent and pending legislation at the state and federal levels that impact 2020 tax filings and provide economic relief for taxpayers affected by the COVID-19 pandemic.

The Comptroller’s office will notify the public about the availability of revised and new tax forms on its website and social media accounts. Additional information on tax forms and updates can be found here.

To read more details about the extension and its implications, please read more from the Comptroller’s office here.

As of now, the Internal Revenue Service has kept its filing and payment deadline at April 15. WCS will keep you up to date on any and all changes.

As always, please do not hesitate to call our offices for additional information and to speak to your representative about how this could affect your situation.