Author: Christopher J. Seger

Is Your Business Required to Collect and Pay Sales Taxes in Other States?

One of the more challenging tax concepts business owners should understand, plan for, and address as part of their overall tax strategy is called nexus.

In simplest terms, nexus defines when you must register to do business and pay sales and use taxes in a particular state (and, in some cases, local jurisdictions). However, there’s nothing simple about it.

In general, if you have a sufficient physical presence in a state – like an office, store, or warehouse – nexus applies. If you have employees working out of another state – even remote workers, agents, or an affiliate – nexus is triggered. And if your business’ economic activity in a state – online or offline – meet certain thresholds, nexus comes into play. These are the easiest triggers to understand – there are others.

What’s more, with the growth of online marketplaces and remote sales, legislation regarding nexus has evolved. As a result, going beyond merely having a physical presence, businesses are required to pay sales and use taxes when they have a significant connection to a state. Each state (and in certain cases, jurisdictions like counties or municipalities) set their own thresholds for triggering “economic nexus.” Thresholds are usually based on revenue, sales volume, and/or number of transactions.

For example, Connecticut adopted its economic nexus threshold in 2018 and updated it in 2019. Today, its threshold is $100,000 in gross sales (including online sales) and 200 or more transactions in the 12 months preceding December 30.

On the other hand, Mississippi adopted its economic nexus threshold in 2023. The threshold is $100,000 in taxable sales within the 12-month period ending on the last day of the most recently completed calendar quarter.

To complicate matters, state thresholds can be adjusted and change. So even if your business didn’t trigger economic nexus a year ago in a certain state that may not be the case today.

The consequences of not complying with nexus requirements can be severe. States can impose penalties, interest, and even civil or criminal charges for non-compliance. Moreover, states can audit businesses and demand payment for uncollected sales tax retroactively for multiple years covered under a statute of limitations. The unexpected financial impact could devastate a business.

To simplify a complex topic, we’ve focused largely on nexus as it relates to sales taxes. However, it’s important to know that when nexus exists it can expand a company’s tax obligations to include state payroll taxes, excise taxes, and franchise taxes (a levy for doing business in a state), as well as additional permit and filing requirements. That’s another discussion for another article.

For now, focus on protecting yourself and your business from the legal and financial ramifications of non-compliance with nexus by consulting with a professional, experienced tax advisor – like the ones you will find at RBT CPAs. Please don’t hesitate to give us a call and learn firsthand why businesses across the Hudson Valley and New York have entrusted us with their accounting, tax, audit, and business advisory needs for over 50 years. RBT and your business can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Is It Time for a Quick End-of-Year Equipment or Facility Upgrade?

Have you been thinking about purchasing new or used equipment to enhance services? How about upgrading technology and software or updating your facility?

With end of year approaching, you have limited time left to consider whether to purchase, lease, or finance certain assets to take advantage of Section 179 tax benefits. It’s also a good time to consider how Section 179 may play into your business and tax strategy for 2024.

Section 179 uses first-year expensing. That means you can deduct the expense for an eligible asset immediately, rather than depreciating it over time. It serves as an incentive for a business owner to invest in the business and enhance its capabilities and services with the purchase and installation of capital equipment.

One big caveat: You must put the asset you purchase into service the year that you plan on taking the deduction. With just weeks left in 2023, it will be important to account for this in your planning.

Most small and mid-sized business owners qualify for Section 179 deductions. Qualifying purchases can include office furniture and equipment; computers and software; certain vehicles (some with annual deduction limits); machinery and equipment; and other property used for business. Security systems, HVAC systems, roofs, fire protection systems, and other structural improvements to non-residential buildings may also qualify for a Section 179 deduction.

Equipment can be new or used (as long as you weren’t the prior owner). It can be purchased outright, financed, or leased. So, let’s say you want to purchase qualifying equipment for $1 million and you have $250,000 for the down payment and finance the remaining $750,000. As long as the equipment is put into service this year, you can deduct the full $1 million this year.

Through 2026, there’s an added bonus. For expenses not eligible for the Section 179 deduction, there’s a bonus depreciation allowance in year one. For 2023, bonus depreciation is 80% — remember, that’s in addition to regular depreciation. The bonus depreciation decreases for the next three years (60% for 2024, 40% for 2025, 20% for 2026). Starting in 2027, this additional benefit will no longer be available. Because of this phase out, businesses benefit the most by making capital purchases sooner rather than later.

Section 179 numbers to know for 2023:

Maximum 179 deduction: $1,160,000
Phaseout threshold begins at $2,890,000 and ends at $4,050,000. (So, if you buy eligible assets that cost more than $2,890,000, your maximum 179 deduction is reduced dollar for dollar by amounts over $2,890,000. Purchases above $4,050,000 are not eligible for a 179 deduction, but bonus depreciation can still apply.)
Bonus depreciation: 80%

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Time Equipment Purchases and Certain Facility Updates to Maximize Tax Advantages

Have you been thinking about purchasing new or used equipment to enhance your manufacturing capabilities? How about upgrading technology and software or updating your facility and equipment? With end of year approaching, you have limited time left to consider whether to purchase, lease, or finance certain assets to take advantage of Section 179 tax benefits. It’s also a good time to consider how Section 179 may play into your business and tax strategy for 2024.

Most small and mid-sized business owners qualify for Section 179 deductions. Qualifying purchases can include office furniture and equipment; computers and software; certain vehicles (some with annual deduction limits); machines and manufacturing equipment; and other property used for business. Security systems, HVAC systems, roofs, fire protection systems, and other structural improvements to non-residential buildings may also qualify for a Section 179 deduction.

Through 2026, there’s an added bonus. For expenses not eligible for the Section 179 deduction, there’s a bonus depreciation allowance in year one. For 2023, bonus depreciation is 80% — remember, that’s in addition to regular depreciation. The bonus depreciation decreases for the next three years (60% for 2024, 40% for 2025, 20% for 2026). Starting in 2027, this additional benefit will no longer be available. Because of this phase-out, businesses benefit the most by making capital purchases sooner rather than later.

Section 179 numbers to know for 2023:

Maximum 179 deduction: $1,160,000
Phaseout threshold begins at $2,890,000 and ends at $4,050,000. (So, if you buy eligible assets that cost more than $2,890,000, your maximum 179 deduction is reduced dollar for dollar by amounts over $2,890,000. Purchases above $4,050,000 are not eligible for a 179 deduction, but bonus depreciation can still apply.)
Bonus depreciation: 80%

If you need help determining whether to act quick to take advantage of Section 179 this year or whether to make it part of your tax strategy for 2024, your RBT CPA client manager can help – reach out to him/her today. Please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Are There Tax Moves You Should Make Before Year End?

In the blink of an eye we’re in the last quarter of 2023. Don’t blink again or you’ll miss the time remaining in the year to make decisions that can impact your tax liability. Instead, take a few minutes to consider deductions and tax credits you may be eligible for. Even better, call your RBT CPAs contact to talk through your options and plans. For now, here are highlights of some opportunities to consider…

Will you be eligible for a Qualified Business Income (QBI) deduction?

Eligible small businesses include includes sole proprietorships, partnership, S corporations, Limited liability companies. For 2023, total taxable income must be under $182,100 for single taxpayers and $364,200 for married taxpayers filing jointly. Businesses with taxable income exceeding those limits may qualify for a partial deduction if taxable income is under $232,100 for single taxpayers and $464,200 for married taxpayers and other tests are met.

For tax years beginning on or before December 31, 2025, the QBI (a.k.a. Section 199A) deduction allows eligible small business owners and self-employed individuals a tax deduction of 20% of their QBI plus 20% of qualified real estate investment trust dividends and qualified publicly traded partnership income. That’s in addition to the standard deduction.

Do you need new equipment?

Internal Revenue Code Section 179 gives you incentive to consider it. If you buy or lease (with qualified financing) appreciable business equipment, you can deduct the full purchase price (or lease amount) from your gross income. Equipment can include office machinery, furniture, vehicles, computers, and more. The item must be new to your business, used for business purposes, and put in service the year that you take the deduction. The most you can deduct under Section 179 for 2023 is $1,160,000. There’s also an 80% first year bonus depreciation for 2023, so you can reduce your tax liability even more.

Have you increased research and development?

You can take a credit to reduce your income tax liability and, under the Inflation Reduction Act, apply up to a $500,000 credit towards payroll taxes for Social Security and FICA. At the same time, it’s important to know that all Section 174 expenses, including R&E for software development, must be amortized over a five-year period (15 years for research conducted outside the U.S.). Before this change, R&E expenses could be immediately deducted from taxable income. So, your tax liability will likely change and may increase significantly.

Have you invested in solar power or energy-saving facility upgrades?

Receive a tax credit for up to $5/square foot for energy efficiency improvements – including but not limited to interior lighting, business envelop, HVAC or hot water systems – that reduce energy and power costs. In addition, if you switch over to low-cost solar power, you may be eligible for a tax credit equal to 30% of the cost of switching.

Should you adopt a new retirement plan?

If eligible, you can claim a tax credit of up to $5,000 for three years for the costs to start, administer, and educate employees about a SEP, Simple IRA, or other qualified plan. What’s more, as noted on the IRS website, “You can claim the credit for each of the first 3 years of the plan and may choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective.”

Deciding whether to take action to reduce tax liabilities and how isn’t simply black and white. It does depend on your short- and long-term business goals, and other variables. That’s why it’s best to speak with your RBT CPAs client manager. He/she can help you understand your options and the implications of any move you make, so you’re in the best position to maximize opportunities that may be available to you in 2023. For more information, give us a call today.

RBT CPAs is proud to say all our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.

14 Marketing Ideas Breweries Can Tap Into

According to a recent article in Beverage Daily, “In a maturing market, US craft brewers are up against rising costs and supply chain disruptions. But the Brewers Association says its midyear survey indicates optimism for the second half of the year.” (Arthur, Rachel. “Optimism and challenges for US craft beer market.” August 14, 2023.)

To help craft beer businesses and restaurants make the most of what’s left of the year, we researched and identified 14 ideas to strengthen your marketing efforts or incorporate into your 2024 marketing plans:

Email newsletter/text messages Stay in touch with customers by creating a regular, ongoing email with updates, specials, and more. (com has information on how to build a customer email list.)
Loyalty program Show customers their patronage is valued by offering discounts on drinks or free swag.
Community engagement Is there a big local annual event taking place? Show your business is part of the community by becoming an event sponsor. Check in with your local Chamber of Commerce to learn about upcoming events.
Give back Support local charities by donating a portion of proceeds during a defined period of time; hosting a pet adoption event; collecting food around the holidays for food banks; setting up a collection box for toys to donate to children, etc.
Swag Consider selling hats, shirts, and other items featuring your mascot, brewery name, tagline, and more. With the holidays coming, branded ornaments may be a big hit among your regulars.
Social media and online presence Engage with your customers even when they’re not at your brewery by establishing a presence via the more popular social media channels, a website, and more. Use it for announcements and promotions, but also to invite customers to name a new brew, recommend the best day of the week to visit, etc.
Be a good neighbor Promote other local shops and their wares via a shop local campaign. Sell local stores’ products onsite or host a “holiday shopping pop up” event right at your brewery. Invite other small businesses to join you in creating and distributing a holiday shop local map with special coupons and discounts.
Create a brand experience From décor and furniture to lighting, background music, the personality and dress of servers and more, everything comes together to create a unique experience for your customers. Make it one they want to be part of time and time again.
Design & print a calendar Make it available to your regulars. Highlight brew release dates, special events, and dates that may be meaningful to your customers (for example, if you cater to a lot of people from the local firehouse, include International Firefighters’ Day – May 4, 2024).
Host events Game night, trivia, watching sports, having a themed party (i.e., empty nesters), holding a blind tasting competition, hosting dart leagues, and more – there are numerous ways to add to the experience you create and help build your returning customer numbers.
Celebrate Celebrate holidays, special events (i.e., Mardi Gras), your business’ anniversary, local heroes (i.e., teachers, veterans, police, etc.), and more to build good will and entice people to visit.
Plan for Dry January Let customers know you have their backs whether they want alcohol or not.
Go back to school Certain university’s offer degree and certificate programs on the craft beer business (i.e., SUNY Schenectady or the University of Vermont) – including marketing. Either take a course or talk to the school about offering internships to students who can put their marketing skills to work for you.
Create a marketing plan Don’t let your marketing ideas get lost. Instead, make them part of a plan that you can update and execute throughout the year. You can find a free downloadable marketing template at com and a free small business marketing guide at Hubspot.com.

While pulling your marketing plans together, you can count on RBT CPAs for all of your accounting, tax, audit, and advisory needs. To learn more, give us a call today.

RBT CPAs do not outsource work to any other country. All of our work is prepared in the U.S.A.

Proposed Alcoholic Beverage Control Law Changes: What’s Next?

Last week, the NYS legislative session ended with no news on updates to the state’s Alcoholic Beverage Control (ABC) Law.

A Commission to Study Reform of the ABC Law was created by Governor Hochul in 2022. Its 21 members were from the Department of Taxation and Finance, Division of the Budget, Empire State Development, NYS Police, and the alcoholic beverage market throughout the state. They were charged with reviewing and identifying opportunities to modernize the law, which was adopted in 1934 and studied for updates in 1963, 2007/2008, and 2015, but saw little change.

At the start of May, the commission released a 192-page report containing 28 proposed changes, with recommendations to move ahead with 18 of them. Starting on page 23 of the report, there’s a summary of the recommendations that the commission agreed should move ahead:

Amend Section 100-b to allow applications to be submitted simultaneous with municipal notice.
Amend Section 97-a to eliminate the requirement of licensure within 2 years for New York City/500 foot temporary permit applications.
Amend Section 99-d to allow corporate changes to take effect prior to application for approval.
Ensure the State Liquor Authority (SLA) is properly funded.
Amend Section 63 to allow additional items to be sold in liquor/wine stores.
Allow on premise retailers to purchase from off premises retailers in a limited fashion. (So, if a bar or restaurant runs out of a certain type of alcohol during business hours it can buy up to a certain number of bottles from a retailer – something that’s not currently allowed.)
Allow an individual to own more than one liquor store in NYS up to a certain limit.
Amend Section 105 to allow off-premises liquor stores to start selling at 10 a.m. on Sundays.
No changes to on-premises hours.
Allow issuance of All Night Permits on Saturdays and Sundays.
Loosen the Tied House Laws.
Eliminate the 500 Foot Law.
Eliminate the 200 Foot Law.
Change liquor license approval standard to “good cause” instead of “public convenience and advantage.”
Remove obsolete portions of the ABC Law.
Create a temporary permit for licensees that allows the service of beer, wine, cider, and liquor.
Create a temporary wholesale permit for wholesale license holders that have applied for a full license.
Review the licensing fee structure for appropriateness.

While the latest legislative session is over and supporters for ABC law changes didn’t see the progress they may have wanted, no doubt there is more to come. We’ll keep you updated as we learn what’s next. In the meantime, if you need any assistance with your accounting, tax, audit or business advisory needs, please know RBT CPAs is here to help. We believe we succeed when we help our clients succeed. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared by in America by employees from our New York offices. Our company does not outsource or offshore work, so you always know who is handling your confidential financial data.

Are Alcohol-Related Law Changes on the Horizon in New York?

New York Governor Hochul released her 2023 State of the State briefing book in January, outlining the work and plans required to achieve the New York dream. Almost at the end of the document – pages 260 and 261 to be exact – there’s a section on rewriting New York’s Alcohol and Beverage Control (ABC) Law.

To summarize this section of the Governor’s brief, the 90-year-old law has grown organically since prohibition ended resulting in many inconsistencies that make it hard to understand, much less comply with regulations. Concurrently, the governor “will advance a policy-neutral rewrite of the existing ABC Law, in order to improve legibility and understanding of the existing law, and to foster a clearer conversation in the future about any proposed reforms.”

Spectrum News 1 reported, “How those laws change could have a wide-ranging effect on both businesses from restaurants to distributors as well as consumers themselves.” The news channel also noted that the governor is open to change, as seen by her backing of a pandemic-era order allowing patrons to take alcohol to go.

Her momentum carried through to 2022 year-end when, according to ABC50-Now.com, the Governor “signed legislation to update the Alcoholic Beverage Control Law and authorize the New York State Liquor Authority to grant eligible catering facilities a license to serve liquor at weddings, banquets or other functions held at off-site locations.”

As part of her briefing book discussion on New York’s ABC Law, the Governor noted that the New York Commission to Study Reform of the ABC Law is continuing its work. News10 explained the Commission was enacted as part of the 2023 New York State budget to modernize the state’s liquor laws. The 21-person Commission, led by Chairman of the State Liquor Authority Vincent Bradley, will recommend changes and any motion receiving a majority vote will be reviewed for possible legislative action.

By May 1 of this year, the Commission’s report is due and will address “impact of the alcohol industry on the state; development in the law and SLA resources to speed license application processing; and business reform and modernization proposals.”

The NY Liquor Authority website notes, “To garner comment on the items that will be discussed, the State Liquor Authority has created a dedicated email address. Industry stakeholders, community groups, and other interested parties are encouraged to share their comments with the Commission here: abclaw.comments@sla.ny.gov.”

Concurrent with the Governor’s actions, the NYS Senate and Assembly, introduced an amendment on January 31 to “amend the tax law, in relation to the amount of credit for
cider, wine, and liquor under the alcoholic beverage production credit” and “provide parity with beer credit based on the taxes for cider, wine, and liquor.” According to TrackBill.com, a new proposed credit ranges from $.14 to $6.44 per gallon, depending on type of liquor and alcohol content.

You can find more information on New York State taxes, exemptions and credits for the producing, blending, distilling, rectifying and bottling of beer, cider, wine and liquor on NY’s Department of Taxation and Finance website.

We’ll keep you updated as we learn more about proposed alcohol law changes in New York State and at the Federal level (i.e., changes to the Craft Beverage Modernization Act provisions of the Tax Cuts and Jobs Act of 2017 transferred “responsibility for administering refunds, reducing tax rates, and tax credits on imported alcohol from U.S. Customs and Border Protection to the U.S. Department of the Treasury effective January 1, 2023”.)

As you consider possible implications on your business, you can depend on RBT CPAs to help lighten your workload. We’re one of the largest CPA firms serving the Hudson Valley and beyond for over 50 years. We believe we succeed when we help you succeed. To find out more about our accounting, tax, audit, and advisory services, give us a call.

Please Note: RBT CPAs is a CPA firm – not law. We are providing the information above for informational purposes only; please do not construe it as legal advice. As always, if you need legal advice, please contact your local legal counsel.