Month: May 2025

3 Areas of Focus for Veterinary Practices in 2025

According to a recent article by the American Animal Hospital Association (AAHA), some of the primary challenges facing veterinary practices in 2025 are economic uncertainty due to inflation and other economic pressures, declining patient visits, and staffing shortages. Amid economic uncertainty, veterinary practices must concentrate on the factors within their control. Given the current state of the market, three areas on which veterinary practices should focus their attention and efforts in 2025 are profitability, financial health, and staffing. These issues are critical to the overall health of a veterinary business—and are especially important for those considering selling their practice in the near future.

Profitability

Though raising fees may have worked in the past as a way of increasing profits, it might not be a viable option for veterinary practices in 2025, with pet owners becoming more and more concerned about rising pet care costs in the current economic climate. With less control over the top line (total revenue), you should focus on the bottom line (net profit) as a way of maintaining strong profit margins. As costs continue to rise, especially for labor and supplies, you will need to attempt to manage costs where you can. Some areas to focus on include inventory, building and maintenance contracts, and staff turnover. You should take time to examine your sources of revenue: Are they profitable? Are there any opportunities to add additional services? You should also review your practice’s write-offs and discounts, making sure you’re not giving too much away. Lastly, fostering a positive workplace culture and employee retention can help to maximize your practice’s profitability. Employee turnover is costly, costing practices up to 50% of an employee’s salary each time a staff member leaves. Therefore, improvements in employee retention can contribute significantly to your practice’s success and profitability.

Financial Health

Practices should keep a close eye on their EBITDA (earnings before interest, taxes, depreciation, and amortization) to monitor financial performance. Other ways of maintaining financial health include budgeting, accurate financial reporting, regular internal audits, reviewing for billing errors or missed opportunities, reviewing trends in average transactions, and cash flow management. You may want to consider outsourcing financial duties to an accounting firm such as RBT CPAs to maximize efficiency and accuracy in your financial processes.

Staffing

As mentioned above, employee turnover can be very costly for veterinary practices—and unfortunately, turnover rates continue to be high for the industry. As the veterinary industry continues to face staffing shortages and retention issues, it’s now more important than ever for practices to focus their efforts on retaining and supporting employees. Student debt for veterinary graduates is on the rise again, according to dvm360. You can attract and retain high-quality veterinary staff by offering benefit plans and maintaining fair wages. Other factors that contribute to employee satisfaction and retention include a supportive workplace environment, high-quality training, workplace practices aligned with a strong mission or value statement, and employee wellness plans. Read more about maintaining a happy and healthy workplace here.

Have Questions?

Managing the business side of your practice in the face of economic uncertainty can be an overwhelming responsibility—but you don’t have to go at it alone. RBT CPAs is here to support your practice’s accounting, tax, audit, and advisory needs. Whether you’re looking to outsource your accounting or seeking guidance on building a financially healthy business, RBT CPAs’ veterinary accounting and advisory services team is here to help. At RBT CPAs, we believe we succeed when our clients succeed. Learn more about how we can be Remarkably Better Together by contacting us today.

Capital Gains Tax Exclusion on Home Sales: Overview and How You Can Qualify

Are you planning to sell your home? You may be able to exclude a portion of the profit of the home sale from your taxable income through the Section 121 exclusion. Let’s explore some of the details of this tax-saving tool and how you can qualify.

How are capital gains calculated?

Capital gains are equal to the profit you make when you sell your home.

In other words…

Capital Gains = Sale Price – (Purchase Price + Capital Improvements + Costs to Purchase/Sell the Home)

Capital gains on the sale of a home are subject to capital gains taxes, as they are considered a form of income. Short-term capital gains (capital gains from the sale of assets held for one year or less) are taxed as ordinary income. Long-term capital gains (capital gains from the sale of assets held for longer than a year) are taxed at three different rates (0%, 15%, or 20%), depending on income and filing status.

What is the Section 121 exclusion?

The Section 121 exclusion allows you to exclude from your taxable income up to $250,000 of capital gains (profit) from the sale of your home. Married couples filing jointly can exclude up to $500,000. This exclusion applies to a range of properties including single-family homes, condos, cooperative apartments, mobile homes, and houseboats. However, you must meet certain conditions to qualify for this tax benefit. It is important to note that most states follow the exclusion, but the rules may vary from state to state.

How can you qualify?

To qualify for the Section 121 exclusion, you must meet an ownership test as well as a use test. You must have owned and used the property as your primary residence for at least two of the five years preceding the sale of the home. The two years do not have to be consecutive, but the total time you have lived in the home must add up to at least two years (24 months). In the case of married couples, only one spouse must meet the ownership requirement, but both spouses must meet the residence (use) requirement individually in order to qualify. If you own and live in more than one home, you must use a “facts and circumstances” test to determine which property qualifies as your main home. A person can only own one “main home” at a time.

What makes you ineligible?

You are not eligible for the Section 121 exclusion if you acquired the property through a like-kind exchange (1031 exchange) within the last five years or if you are subject to expatriate tax. In addition, if you sold another home within the two-year period preceding the home sale and claimed the Section 121 exclusion on that sale, you cannot qualify for the exclusion again. Individuals may only take the exclusion once within a two-year period. There are some exceptions to the eligibility test based on circumstances such as separation or divorce during home ownership, death of a spouse, or status as a service member. A full list of exceptions to the eligibility test can be found here.

Do you qualify for a partial exclusion?

Though you may not qualify for a maximum exclusion based on the eligibility requirements, you may still qualify for a partial exclusion. You may qualify for a partial exclusion if your reason for moving is due to a change in workplace location, health-related events, or unforeseeable events (i.e., your home was destroyed or condemned, death of a homeowner, divorce, etc.).

Looking for more information or guidance?

For additional information on the Section 121 tax exclusion, including worksheets for calculations, visit IRS Publication 523 (2024), Selling Your Home. For guidance on how you can make the most of capital gains exclusions and other tax-saving opportunities in the real estate market, you can rely on our experts at RBT CPAs. Our experienced professionals are here to support all of your tax, audit, accounting, and advisory needs. Give us a call today to find out how we can be Remarkably Better Together.

Buy-Sell Agreements and Their Role in Succession Planning

As many know, a succession plan is a critical component of any business owner’s long-term business and financial strategy. Succession plans help to ensure the continuation of your business even after you leave your role as owner. If your company has multiple owners, you may benefit from establishing a buy-sell agreement as a part of your overall succession plan. This article will discuss buy-sell agreements along with other possible options for succession planning.

Buy-Sell Agreements

An important question that you will face when developing a succession plan is how ownership of the business will be transferred when the time comes for you to leave your role as owner. One option for transferring ownership is through a buy-sell agreement. Buy-sell agreements are typically implemented by companies with multiple owners to guarantee business continuity in the event that one owner leaves the business for reasons such as retirement, voluntary exit, disability, or death. Buy-sell agreements help to protect the business by allowing a smooth transition of ownership, preventing owners from selling interests to outside parties, providing a method for assessing the value of company interests, and avoiding certain tax consequences of transferring ownership.

There are two main types of buy-sell agreements: cross-purchase agreements and entity-purchase (redemption) agreements. Under a cross-purchase agreement, the interests of the departing owner are purchased by the remaining owners. In the event of an owner’s death, tax-free life insurance policies (taken out by all owners on each other) are often used to fund this purchase. Under an entity-purchase agreement, the business entity itself purchases the interests of the departing owner, also commonly using tax-free life insurance benefits to fund the purchase. The establishment of buy-sell agreements is merely one component of a comprehensive business succession plan.

Other Options for Succession Planning

Besides buy-sell agreements, other methods of transferring ownership include gifting or selling your business to a family member, selling to management, transferring ownership to your employees, selling to an outside party, or closing the business. Each of these options comes with its own implications, which is why it is important to consult with a knowledgeable advisor when deciding which succession options work best for your unique needs. RBT CPAs’ professionals in our Trust, Estate, and Gift Practice can help you create and update a succession plan that gives you peace of mind in knowing that you, your loved ones, and your business will be taken care of according to your wishes.

RBT’s experts can help you form a succession plan, refer you to an attorney who can draw up the necessary legal documents (or work with your attorney if you already have one), and review legal documents to ensure they accurately reflect your wishes. We are also available to review and update your plan annually to ensure it continues to reflect your wishes and is adapted due to any tax law changes.

If you are interested in learning more, getting started on a succession plan, or reviewing plans you already have in place, please don’t hesitate to give RBT CPAs a call to find out how we can be Remarkably Better Together.

Is Additive Manufacturing the Right Choice for Your Business?

MIT defines additive manufacturing—often referred to as 3-D printing—as the process of creating an object by building it one layer at a time. Additive manufacturing has risen to the forefront of discussions in the manufacturing world over the last several decades. Many types of materials can be used in additive manufacturing, including polymers, metals, concrete, plastics, ceramics, gels, and even biological materials. This innovative technology has been used to create a wide range of products, including furniture, airplane parts, hearing aids, medical prosthetics, and even human organs (yes, organs!).

While you may not be in the business of 3-D printing organs, your company may still stand to benefit from the ever-evolving potential of additive manufacturing. There are many advantages associated with the adoption of additive manufacturing technology, such as increased customizability, cost-saving potential, simplified supply chains, the ability to create lightweight products, and sustainability. However, the cost of additive manufacturing equipment has long been an issue for small and medium-sized manufacturers. Let’s take a look at some of the benefits of adopting additive manufacturing, as well as the problem of affordability facing many small and medium-sized businesses.

Benefits of Additive Manufacturing (AM)

With AM, designs can be sent directly to 3-D printers for production, cutting out several steps along the supply chain. This can significantly reduce time spent on product development and production.
AM can reduce operating costs by accelerating the design process, decreasing labor costs, and cutting down on wasted materials.
With AM, companies are able to produce only the amount of product that they need, reducing waste and improving sustainability.
With AM, products can be manufactured in small batches, which cannot be done as cost-effectively through traditional manufacturing methods.
Products become easier to customize (for example, medical prosthetics) when produced in small batches using AM.
AM gives manufacturers the ability to create products with different materials on the inside and the outside, something that is difficult to accomplish in conventional manufacturing.
AM allows companies to create lightweight products, an especially useful capability for the aerospace and automobile industries.

The Downside: Cost

Despite its potential benefits, additive manufacturing is not without its flaws and challenges. One of the most significant issues with additive manufacturing is its high cost, a factor that has long acted as a barrier to entry for small and medium-sized manufacturing businesses. Not only are 3-D printing machines typically very expensive, but the raw materials required for 3-D printing can also be highly specific and costly. Staff also need to be trained on the new technology, requiring an additional investment of resources. However, over the last several years, additive manufacturing equipment has become significantly more affordable. Additionally, the cost savings associated with additive manufacturing can help small businesses achieve a high return on investment, potentially making up for high startup costs. In the end, the potential benefit of adopting additive manufacturing depends largely on a company’s individual goals and products. Businesses with specific goals, such as creating lightweight or highly customized products, likely stand to benefit the most from investing in 3-D printing technology.

Conclusion

Additive manufacturing isn’t for every business. Certain manufacturers will benefit more than others from investment in AM. The cost of equipment and materials can be a barrier for smaller companies, though the technology is becoming more affordable with time. While you decide whether additive manufacturing is a worthwhile investment for your business, you can depend on RBT CPAs to support all of your tax, audit, accounting, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

Embracing the Potential of AI in the Construction Industry

Artificial intelligence is taking the world by storm. AI is at the center of some of the most cutting-edge technologies developed in recent years, but what exactly is AI? IBM defines artificial intelligence (AI) as “technology that enables computers and machines to simulate human learning, comprehension, problem-solving, decision making, creativity, and autonomy.” AI technology is constantly developing and expanding into new areas. As individuals, we rely on AI technology every day, whether using facial recognition tools to unlock our phones, asking Alexa to play a song, tracking our health data using smartwatches, or using Google Maps to navigate while driving.

But AI’s impact extends far beyond our everyday individual experience. Industries across the board are turning to AI technologies to streamline processes, tackle everyday issues, improve productivity, and implement data-driven solutions. And the construction industry is no exception. Construction-specific AI tools are more widely accessible than ever before. These constantly evolving technologies are transforming the construction industry altogether, offering solutions to some of the industry’s most pressing issues and opening the door to new opportunities. Let’s take a look at some of the most notable benefits of artificial intelligence for construction businesses.

Benefits of AI for Construction Companies

Enhanced Data Analysis: Among the tasks that AI technology can carry at a much faster rate than humans is the collection and analysis of large amounts of data. Not only can AI gather vast amounts of data, but it can also extract useful information, identify patterns, make predictions, and provide valuable insights based on that data. Many key processes within the construction industry rely on data analytics, including planning, design, and risk assessment. With the help of AI, these operations can be carried out much more accurately and efficiently, reducing both the time spent on these tasks and the opportunity for human error.
Streamlined Preconstruction and Design Processes: In the preconstruction and design phases of projects, AI can assist with project scheduling, work in conjunction with Building Information Modeling (BIM) programs, identify and assess potential contractors, create 3-D models, accelerate the bidding process, and provide design options and solutions.
Accelerated Bidding and Negotiation Processes: Automated systems accelerate the time-consuming bidding and negotiation processes by evaluating and comparing bids, estimating project costs, identifying profitable jobs, and providing accurate and objective data for use in negotiations.
Automated Supply Chain Management: AI can be used to assess options for suppliers, manage inventory and orders, forecast material needs, optimize transportation routes and methods, and identify potential disruptions or delays.
Improved Project Management: AI can help project managers allocate labor and materials, schedule construction tasks, assess site safety, and monitor project quality and progress. AI-powered drones can capture aerial images of project sites and analyze the data to identify issues and assess progress.
Better Site Safety: AI systems can be used to conduct detailed risk assessments and to monitor compliance with safety regulations. AI-powered cameras are able to evaluate project sites and identify potential safety risks.
Quality Control: AI technology, such as cameras and drones, can monitor a building site for errors or inconsistencies. AI tools can also predict when maintenance is needed for equipment and building systems (such as HVAC and electrical systems).
Improved Financial Management: AI tools can generate cost estimates and cost analyses, as well as identify opportunities for cost reduction.
Use of Robotics Technology: In addition to AI-powered drones, other AI-driven robots can perform a range of construction tasks, including bricklaying, welding, and moving heavy materials.
Reduced Costs: AI can aid in resource allocation, track energy usage, reduce waste, and minimize delays, all leading to increased efficiency and reduced costs.
Transparency and Fraud Prevention: Access to real-time project data (generated by AI) enhances transparency for stakeholders. AI tools can also help to detect suspicious activity, such as bid rigging.
Potential Solution to Staffing Challenges: AI technologies can help to address the labor shortage in the construction industry by automating repetitive and time-consuming tasks.
Time Saved: Automated systems free up time for employees and management to focus on other tasks and goals.

Let Us Help

The vast possibilities presented by artificial intelligence have the potential to transform the way construction companies operate completely. While you consider ways to utilize AI for your business, you can depend on RBT CPAs to take care of your tax, audit, accounting, and advisory needs. Contact us to find out how we can be Remarkably Better Together.

Popular SLA Permits (and Caveats)

Over thirty different permits are available through the New York State Liquor Authority (SLA) for various purposes, including special events, transportation, and marketing. Applications for some of these permits can be completed online, while others must be mailed in. Each permit bears its own stipulations and conditions. This article will highlight some of the most popular permits issued the by the NYS Liquor Authority along with their provisions.

Following are three popular permits that are available online. To apply for online permits, you will need to log in to or create a NY.gov account.

One-Day Alcohol Event Permit

This permit, also known as the Temporary Alcohol permit, allows the sale and service of alcoholic beverages for consumption at an event for a period of 24 hours. The fee for the One-Day Alcohol Event Permit is $36 per point of sale, per day. Both licensees and members of the public can apply for this permit.

Caveats: Alcoholic beverages sold by the permit-holder must be consumed within the licensed area only. Under the ABC Law, no more than four permits may be issued for one location within a 12-month period (with the exception of certain Not-for-Profits). However, the NYS Liquor Authority may consider additional permits if provided with a letter of no objection by the municipality and police department.

Apply for the One-Day Alcohol Event Permit here.

Catering Permit

This one-day permit (valid for 24 hours) allows currently licensed on-premises retailers to provide alcohol at certain private events located off-premises. The applicant must provide food in addition to alcohol. The fee for the Catering Permit is $48 per point of sale, per day. Only active on-premises retail licensees can apply for this permit.

Caveats: The application for this permit must be submitted at least 15 business days prior to the event. Applicants cannot cater for themselves (they must be hired by a third party to cater the event). The food provided must meet the requirements of the ABC law.

Apply for a Catering Permit here.

Marketing Permit

The NYS Liquor Authority website states the following regarding the Marketing Permit:

A Marketing Permit authorizes a licensed manufacturer or wholesaler, or an unlicensed out-of-state supplier, or a licensed in-state supplier to:

Conduct tastings and provide samples of the permit holders’ products to consumers;
Accept orders from licensed retailers on behalf of a wholesaler licensed in NYS authorized to sell such products at wholesale; and
Sell their products by the bottle to consumers during tastings

A Marketing Permit can be used at the following events/locations:

An establishment licensed to sell at retail the alcoholic beverages that will be tasted (i.e. liquor store, bar, restaurant);
The State Fair, recognized county fairs and farmers markets operated on a not-for-profit basis; and
Outdoor and indoor gatherings, functions, occasions or events sponsored by a bona fide charitable organization

One-Time Tasting Permits cost $25, and Three-Year Tasting Permits cost $395.

Caveats: To use a Marketing permit for events not listed above, you must contact the Liquor Authority at least 15 days prior to the event to receive permission. The supplier or wholesaler cannot charge a fee to consumers attending the event. Samples cannot exceed 3 ounces for beer, wine products, and cider, 2 ounces for wine, and 1/4 ounce for liquor. Liquor and wine sold by the bottle must be price posted. The supplier must obtain a Transportation Permit to transport alcoholic beverages to the event location (or use a company with a Transportation Permit). Manufacturers may use a company-owned car.

Apply for a One-time Tasting Permit here.

Apply for a Three-year Tasting Permit here.

Other Permits

Many other permits are available online, including Bottling Permits, Brewer Tasting Permits, Trucking Permits, and Warehouse Permits, to name a few. A complete list of online permits, along with their descriptions and fees, can be found here. Some permits are not available online, including the Temporary Operating Permit, the Liquidator’s Permit, the Solicitor Permit, the Sunday On-Premises Sales Permit, the Wine/Liquor Auction Permit, and others. Applications for these permits must be printed, completed manually, and mailed to the New York State Liquor Authority. Visit this page to see a full list of these permits and to download applications.

Contact Us

While you focus on permit applications for your business, you can depend on RBT CPAs to focus on your business’ accounting, advisory, audit, and tax needs. Give us a call today to find out how we can be Remarkably Better Together.

Is It Time to Update Your PHA’s Software? Outdated Housing Software Hinders Financial Operations

Like many organizations, Public Housing Authorities rely on online systems to carry out a wide range of essential operations. However, PHAs using antiquated software often face a multitude of challenges and frustrations. Outdated software impedes operations, leads to delays, hinders financial processes, and increases the PHA’s susceptibility to cyber threats.

Issues Posed by Outdated Software

PHAs rely on IT systems for many crucial processes, including inspections, application management, reporting, and other necessary functions. These online processes are essential for maintaining the safety, security, and everyday operations of PHAs. However, HUD has long experienced issues due to software complications, with IT failures causing major disruptions in PHAs across the country. Reliance on outdated information technology (IT) systems and software not only causes delays and disorganization in PHAs but can also increase the risk of cyber threats and serious data breaches. For the last several years, HUD has been working towards technology modernization and increased cybersecurity.

In a report entitled “Top Management Challenges Facing the U.S. Department of Housing and Urban Development,” The Office of Inspector General summarized the most pressing issues facing HUD in fiscal year 2025. The report discussed HUD’s continued efforts to improve cybersecurity, but also spoke about the ongoing challenges related to the use of “legacy systems.” Legacy systems refer to older or outdated hardware, software, and programs. The report states, “These legacy systems and processes present elevated risks to HUD’s IT environment and increase risk in the functionality of HUD’s key programs. Managing cybersecurity risks for legacy systems is resource-intensive and limits OCIO’s capacity to acquire and deploy the technology necessary to implement or improve critical security controls.” The report points to the difficulties HUD programs face in attempting to modernize a large number of legacy systems while operating within a limited budget.

Impact on Financial Processes and Reporting

Among the operations negatively impacted by the use of outdated software are critical financial processes. Antiquated manual processes leave more room for error and inaccuracy than modern online systems. The use of outdated software impedes budgeting and financial reporting processes, impacts the efficiency of audits, and prohibits auditors from running certain reports.

Software Options and Benefits

Modern IT systems significantly enhance efficiency and organization across financial processes and other PHA functions. A variety of software options are available to PHAs for use in both tenant accounting and financial accounting. Some commonly used programs include PHA-Web, Yardi PHA Suite, MRI Software (HAPPY and Lindsey), AppFolio, and RealPage. These platforms offer a range of benefits such as electronic document storage, paperless processing, streamlined workflows, automated processes, routine maintenance, and other features. PHAs should use the most recent, up-to-date version of the program available.

Additional Guidance

Up-to-date technology, reliable operations, and effective financial processes are all necessary for your PHA to function optimally and provide the critical services relied on by so many. For more guidance on improving financial processes within your PHA, please don’t hesitate to reach out to RBT CPAs. RBT CPAs proudly provides our accounting, audit, tax, and advisory services to HUD programs in the Hudson Valley and beyond. At RBT CPAs, we believe we succeed when our clients succeed. Give us a call today to find out how we can be Remarkably Better Together.

Is Your School District Audit-ready?

Financial statement audits are crucial to any organization’s financial health, and school districts are no exception. A financial statement audit provides an independent assessment of an organization’s financial statements, which in turn ensures transparency, accountability, and a strong foundation for future planning. Preparation is key to ensuring a smooth audit process and avoiding delays. Here are some ways school districts can prepare for a financial statement audit.

Educate your audit committee.

Audit committees are required under NYS Education Law. Audit committees oversee the audit process. The committee acts as the primary point of contact between the auditor and the appropriate staff or departments. The committee also reviews audit findings and assists in recommendations for improvement. The Government Finance Officers Association (GFOA) makes certain recommendations for the establishment of audit committees, which can be found under the “Best Practices” section of their website.

Know the regulations and requirements.

The audit committee should be familiar with the various regulations governing financial reporting for school districts set forth by the Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) guidelines. This guidance is frequently updated, so districts must stay up to date with the latest updates and revisions to these standards.

Understand the audit process.

The audit committee should understand the scope of the audit (what will be assessed), the timeline, and the roles and responsibilities of everyone involved. The audit committee should also understand that audit-ready means that all supporting documentation should reconcile to the trial balance before the auditor’s review. The auditor’s role is to verify accuracy, not to make adjustments. Any corrections should be identified and addressed before the audit begins to ensure a smooth and efficient process.

Gather all necessary documentation.

The school district must request, collect, and organize documentation and information from the appropriate departments and staff, per the audit requirements. This includes general ledgers, detailed schedules of account balances, bank statements, invoices, receipts, payroll records, purchase orders, contracts, and other financial documents. The documentation should be easily accessible for the auditor, and all financial records should be reviewed for accuracy prior to an audit.

Review internal controls.

Regular internal control assessments help to strengthen the mechanisms for preventing fraud and abuse within an organization. Internal controls include procedures for authorization, record keeping, reconciliations, and auditing. These processes must be periodically reviewed to ensure that they are achieving their objectives in preventing risk to the school district.

Review prior years’ audit findings.

Ensure that corrective actions have been taken for any deficiencies identified in the prior year’s audit. This will not only reduce the likelihood of repeated findings but also demonstrate your commitment to improving your financial management practices.

Communicate with your auditor and prepare for questions.

It’s important to keep an open line of communication with your auditor, maintaining transparency throughout the audit process. Make sure you disclose any changes to your financial systems or operations. Be prepared to answer questions regarding your school district’s financial procedures and processes, internal controls, documentation, operations, and personnel.

Further guidance

A financial statement audit can be a daunting and sometimes stressful event, but proper preparation can reduce the opportunity for error and disorganization. If you have any questions about the audit process for school districts, or if you need any other audit, accounting, tax, or advisory support, please know RBT CPAs is here for you. We’ve been proudly serving school districts, municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 55 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

OSC Report Raises Concerns Over Financial Transparency in New York State Villages

In December 2024, the Office of the NY State Comptroller (OSC) issued a report titled “Transparency and Accountability of Fiscal Activities in Villages.” The report examined financial transparency in the 532 villages that comprise New York State, specifically focusing on the villages’ accounting records and Annual Financial Reports (AFRs) from the 2023 fiscal year. The OSC’s report raises concerns about many villages’ lack of timely reporting of financial information.

Why is transparency important?

The report emphasizes the need for transparency in village governments, especially when it comes to fiscal processes. Village officials are responsible for planning and managing operations in the village, including financial operations. Village boards are trusted with deciding how to spend villagers’ tax dollars, and as such, these boards must maintain high levels of transparency and accountability. According to the report, “transparency means ensuring that reliable, complete and timely information is readily available and accessible.” Not only does transparency allow villagers to know how their tax dollars are being spent, but it also gives the public the opportunity to provide feedback on important matters.

What are the financial reporting requirements for villages?

Villages are required by law to file Annual Financial Reports (AFRs) with the OSC between 60-120 days after the close of the fiscal year. AFRs are to be submitted by village CFOs (Chief Financial Officers). The AFR details the village’s financial transactions such as revenue, expenditures, debts, cash reserves, and fund balance. The village must make the AFR available to the public on the village’s official website and publish a notice in the village’s official newspaper within 10 days of the AFR being filed. According to the OSC report, consistent filing is important as it creates a comprehensive financial picture for stakeholders, including local officials, taxpayers, researchers, and legislators, among others.

What were the findings?

Below are some of the findings highlighted in the report for fiscal year 2023:

Of the 532 villages in New York State, only 246 (46%) filed their 2023 Annual Financial Report with the OCS by the required due date
210 villages (40%) filed their Annual Financial Reports after the due date
76 villages (14%) did not file their Annual Financial Reports at all

Though there was a 16% improvement in villages filing AFRs on time between 2019 and 2023, the percentage of villages that did not file an AFR at all has gone up from 1% in 2019 to 14% in 2023. The report calls this increase a “concerning trend.”

Why are villages not filing AFRs?

The OCS homed in on 30 villages to examine their financial records more closely. They found that 25 of the 30 villages did not file an AFR with OSC and four filed significantly late, while only one village filed within the required time period. In addition, 28 of the selected villages lacked any records of annual audits.

Village officials in the 25 villages who did not file AFRs stated the following as the primary reasons for not filing:

Incomplete accounting records (number one reason for not filing)
Vacancies or high turnover in CFO role
Loss of accounting staff
Lack of training/technical help for filing process
Delays encountered by CPAs
Delayed filing due to CFO taking significant leave
CFO was unaware of the filing requirement

What is the importance of timely and accurate financial reporting and audits?

Inadequate or untimely financial reporting leads to a lack of transparency in village operations and a lack of information for taxpayers and other stakeholders. Timely and accurate financial information is necessary for village boards to develop budgets, decide property tax levies, and make other financial plans. Annual audits are also crucial for monitoring the status of the village’s financial records, reducing the risk of mismanagement, and ensuring the proper use of public funds.

Looking for guidance?

The OSC provides training sessions for board members, which can be accessed here. In addition, RBT CPAs’ specialized government team offers auditing and consulting services to villages in the Hudson Valley and beyond. For assistance with financial reporting requirements, please don’t hesitate to reach out to one of our experts today. Give us a call today and find out how we can be Remarkably Better Together.

Do You Have a Succession Plan in Place?

You’ve put countless hours—and likely many years—of hard work, dedication, and passion into your restaurant business. To ensure that the legacy you have worked so hard to build continues after you step away, you need to formulate a plan for the future of your business. Creating a succession plan is crucial for ensuring business continuity and enabling a smooth transition of ownership when the time comes.

When is the best time to create a succession plan? The answer is, as soon as possible. A succession plan often takes years to develop and execute, as you will need time to identify, prepare, and mentor your chosen successor(s). You should begin planning for succession long before you expect to retire or sell your restaurant. Life is unpredictable, and you never know when circumstances may demand a transition of ownership. The absence of a succession plan can have devastating financial and operational consequences for your business. In the case of an unexpected event such as injury, illness, or even death, you’ll want to ensure that the management of your business is left in trusted hands.

Not only does a detailed succession plan provide a blueprint for the future of your company, but it also earns the confidence of your employees, investors, customers, and other stakeholders by assuring them that a plan is in place for the inevitable transition of leadership. As such, you should communicate your plan, as well as any changes or updates, to all relevant stakeholders. Your succession plan should be regularly reviewed and adjusted if necessary to ensure alignment with the business’s goals and needs.

A key element of any succession plan is, of course, the selection of a successor. Since many restaurants are family-run businesses, succession plans often involve selling or gifting ownership to the next generation. Other possible strategies include identifying and developing a non-relative successor, selling to an outside party, or establishing buy-sell agreements in the case of multiple owners. You may choose to sell the building if it is owner-occupied, or you may decide to sell the business, hold the real estate, and rent to the new business owners.

As you can see, there are several different ways to approach the issue of succession. But how do you know what the best course of action is for you and your business? That depends largely on your personal goals and individual situation. A trusted team of advisors—including an accounting professional—becomes a critical resource when making these kinds of decisions.

RBT CPAs’ accounting experts are available to work with you to create a succession plan that best meets your goals. Our firm has been supporting restaurants at all stages of their business lifecycles for over 55 years, and our professionals are deeply familiar with the unique challenges and opportunities facing the restaurant industry. You can count on our CPAs to help you navigate the tax implications and other financial considerations of transferring ownership of your business.

Don’t leave your legacy up to chance. Protect the future of your business by developing a succession plan today. Call RBT CPAs to speak with one of our experts, and find out how we can be Remarkably Better Together.