An easy way to streamline your business processes is by outsourcing accounting work. That way, you continue to focus on the growth, while an expert handles time-consuming functions. Also, learn about TCJA here:
Tax Reforms Under TCJA: A Round-Up And How Outsourcing Can Help
When the tax season got over in April 2019, many taxpayers were taken aback. The taxes to be paid were higher than anticipated while they received significantly fewer refund from the Internal Revenue Service (IRS) as compared to last year, despite having unchanged financial circumstances.
That is because of President Trump’s changes to the US tax code – the most extensive set of changes in over 30 years. As a result, accountants and tax specialists are now encouraging clients to update their withholdings in preparation for the next tax season by filling out IRS form-4 and submitting it to their payroll departments.
These are the Tax Cuts and Jobs Act (TCJA) that will continue to impact:
Standard deduction has now doubled for all statuses. This is primarily an indirect preventive move against the widespread use of itemised deductions.
There have also been several changes made to specific itemised deductions. For instance, the amount of local and state tax (both income and property) cannot exceed $10000 on an MFJ return.
The mortgage interest deduction is capped at $750000 for loans taken after December 15, 2017. This limit remains capped at $1 million for mortgages established before that date.
Personal exemptions have been eliminated from 2018. However, the doubling of the standard deduction offsets this elimination and creates the necessary compensatory effect. The highest taxation rate for individuals has come down to 37% from 39.6%.
4. Estate and Gift taxes
The Estate Tax and Gift Tax rules have also undergone significant changes. Exemption per individual under the Estate Tax has gone up to $11.18 million in 2018, as compared to $5.49 million in 2017.
This exemption, which is adjusted for inflation, will reach $11.4 million in 2019. However, this provision will expire in 2025. From January 1, 2026, the exemption amount will go back to $5 million per individual plus the inflation adjustment.
Concerning gifts, any US individual can gift up to $15000 per annum in 2018. Any gifts that exceed this amount will automatically bring down the $11.8 million gift-tax lifetime exemption limit.
The estate duty exemption limit for 2018 is $11.18 million. Certain gifts do not bring down the exemption limit, including:
5. Business tax
Concerning business taxes, the law now specifies a uniform corporate tax rate of 21% and repeals the corporate alternative minimum tax. Combined with local and state taxes, this brings the statutory rate under the new law to 26.5%.
6. Anti-abuse tax
The law also introduces a territorial tax system, under which only domestic earnings will be taxed. Companies that have over $500 million in annual gross receipts will be subject to the base erosion anti-abuse tax. The said reform has been designed to counteract base erosion and profit shifting, a strategy in which profits made in one country are moved to another with low or no taxes.
Now that the 2020 tax season is about to commence in a few weeks, it is imperative for CPA firms like yours to not only stay on top of all tax reforms but also make necessary arrangements to tackle the workload efficiently.
That is where outsourcing accounting work can make a difference. Although it is still met with hesitation, it can bring down costs by up to 60% if you find the right partner. Let us take a look at three benefits of outsourcing accounting work:
If you spend more time handling tedious tasks such as bookkeeping and payroll, and less time engaging with clients, it is time to consider outsourcing accounting work. When you outsource, there is a certain amount of skill and expertise that your outsourcing partner brings to the table.
They will help you refocus on your core business areas to boost your efficiency and improve your bottom line. The trained staff at the outsourcing companies are familiar with the latest changes in accounting laws and regulations. They will ensure that your practice complies with them.
Despite the vital role it plays in the smooth functioning of your practice, accounting can become a low priority. One of the easiest ways to streamline your business processes is by outsourcing accounting work, and add staff without any effort on your part. This way, you continue to focus on the growth, while an expert handles time-consuming functions.
3. Greater revenues
If you are looking for a bump in revenue, you can do so by outsourcing accounting work. Outsourcing can help you drive more significant revenues by handling non-core tasks such as payroll and accounts payable, while you focus on hunting and farming strategies for growing your CPA firm.
Outsourcing is not just a viable option. But the right outsourcing partner can offer a sustainable strategy. Not only does that help your CPA firm achieve business goals by reducing costs and improving efficiency, but it also contributes to its profitability and client satisfaction levels.
If you are considering outsourcing accounting work, but still want to make sure you are making the right decision, don’t forget to get in touch with Team QXAS, and we will help you out with your queries. Speak soon!