Author: Ketel Thorstenson, LLP

KT Insights
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QuickBooks Online – Is this Software for You?

Whether starting or expanding a business, it is always important to find the accounting software that best fits a company’s needs. With so many options out there, this can be an overwhelming decision. We are commonly asked, “Is QuickBooks Online the right software to use?”. While there is not a clear answer to this, let’s take a look at some of the favorite QuickBooks Online (QBO) features that could benefit your business.

Bank Feeds: Each month, all bank and credit card accounts should be reconciled: this captures all the appropriate revenue and expenditures. Manually entering these transactions can often be tedious and frustrating. In QuickBooks Online, there is the option to link bank and credit card accounts to the program. This will automatically download every transaction that has cleared the bank into a holding area—the bank feeds.

Once transactions are imported into the bank feeds, it is easy to code the revenue and expenditures to the appropriate chart of account categories. There is also the option to set up rules, which allows the software to automatically code transactions into the program. Using bank feeds is an efficient process for reviewing transactions and bank reconciliations are seamless.

Cloud-Based Software: One of the most common capability requests is to be able to access the software from anywhere.  While there are ways to have multiple users for QuickBooks Desktop, it is more cumbersome than QuickBooks Online.

QuickBooks Online is a cloud-based software through Intuit. This means the data is safely stored and easily accessed through a web browser. Employers can easily add users and give access to their data. Clients also love that they can access their data from any device.

Accounting Firm Access: Businesses like the ability to have their QBO with the option to add multiple users and accounting firms. All it takes is an email address to invite the firm. Once the invitation is accepted, there is instant access to the company’s books.

Payroll E-File Abilities: Running payroll and making sure the taxes are filed correctly can be a daunting task. A payroll subscription can easily be added to a QuickBooks Online account.  

We often hear that this payroll software is user friendly: easy to enter employees, process payroll, and even pull reports. A convenient feature in QuickBooks Online is the ability to e-file payroll taxes and forms. Businesses can link their EFTPS account with QuickBooks Online. Once this is set up, payroll tax liability payments can be scheduled straight from QuickBooks Online. Not only does the payment get made it also automatically schedules the payment in the correct posting period and year.

Notable Mentions: There are many other favorite features of QuickBooks Online. A few notable mentions are as follows: the ability to easily pull reports, the ability to track revenue by class and the ability to easily customize chart of accounts.

Accounting software can be overwhelming and confusing. Ketel Thorstenson has a team of QuickBooks Pro-Advisors that are trained and knowledgeable in QuickBooks Online. If you are contemplating using QuickBooks Online, have questions or want training in the software, we are here and happy to help!

September 27, 2022
| Ketel Thorstenson, LLP
KT Insights
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The IRS Increased the Mileage Rate for the Rest of 2022

On June 9, 2022, the IRS announced that they would make a mid-year mileage rate change to combat the much higher-than-normal gas prices. If you qualify for mileage deductions, this could help you trim your 2022 tax bill.

From July 1 through December 31 of 2022, the standard mileage rate for business travel will increase from $0.585 per mile driven for business to $0.625 per mile.

The rate will also increase for active-duty military members who use their vehicles for medical or moving purposes. The mileage rate is $0.18 per mile for the first half of 2022, while the rate will increase to $0.22 per mile for the second half of 2022.

If you’re self-employed and use your car for business travel, you can get a tax deduction for the business use of your vehicle. The standard mileage rate has less record keeping which makes it more straightforward.

If you have questions about this or other tax related issues contact your trusted advisor on the KTLLP Tax Team.

June 16, 2022
| Ketel Thorstenson, LLP
KT Insights
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At Your Service: KTLLP Supports Hospitality Industry

The Black Hills area thrives on tourism — and behind it, the spirit of true hospitality. The act of being friendly, welcoming, knowledgeable, and organized are the hallmarks of hospitable treatment. At Ketel Thorstenson, LLP (KT) we have the same values in the accounting industry.

The hospitality industry is highly competitive and cyclical in nature. Having the right accounting and tax advisor to make the most of your investment and opportunity is key. KT serves as a trusted advisor to the hospitality industry, including entities such as hotels/motels, resorts, campgrounds, casinos, attractions, restaurants, fast food establishments, and more. Business owners in the hospitality industry come to KT for everything from management consulting to entity selection. The KT Hospitality Team takes great pride in consulting on various industry specific issues as well as the broader needs of these businesses and their owners.

Hospitality and tourism can pose several financial challenges, yet the industry can be one of ongoing success and reward with proper financial management. The KT Hospitality Team can work with you on specific problems and enjoy celebrating your successes. We assist our clients in growing their portfolios with help in financing arrangements, cash flow forecasting, tax planning, assurance needs, and accounting services.

Discover the KT brand of hospitality—we call it “Be Innovative” which is one of our core values. Our definition is offering knowledgeable teams dedicated to delivering strategic solutions to ensure our people, clients, and communities reach their fullest potential. Call Austin Eichacker, Hospitality Team Leader at KT today or submit a quick request for services form on the contact us page at ktllp.com, and let’s talk about how we can help.

May 24, 2022
| Ketel Thorstenson, LLP
KT Insights
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QuickBooks 2019 Discontinuation Scheduled

Intuit announced that they are discontinuing an older version of QuickBooks. If you are using QuickBooks 2019 then you won’t be able to use certain services and features after May 31, 2022.

This is particularly important when you consider that Intuit announced that starting with QuickBooks 2022, the desktop version will only be available as a subscription moving forward.

What this means is that for the QuickBooks 2019 desktop products, after that date:

  • QuickBooks 2019 will continue to work after this date, for basic accounting functions.
  • Any service that relies on an Intuit server (such as desktop payroll, online banking, etc.) will no longer be functional in this release.
  • Live technical support for this product will no longer be available from Intuit.
  • Intuit will not guarantee that you can register products or retrieve keycodes.
  • There will be no further maintenance or security updates to the program.

This applies to the following products:

  • QuickBooks Pro 2019
  • QuickBooks Premier 2019
  • QuickBooks Desktop Accountant 2019
  • QuickBooks Enterprise Solutions V19
  • QuickBooks Desktop for Mac 2019

If loss of any of these services are a problem for your business, you can upgrade to a more current version to continue getting support.

If you are a client of Ketel Thorstenson and have questions about your QuickBooks products, please contact your advisor.

April 25, 2022
| Ketel Thorstenson, LLP
KT Insights
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Commercial COVID Grant Funding

Over the past 18 months, many commercial entities have received federal grant funding for the first time due to COVID-19. The information regarding how and when to use such grant funds has been limited, vague, or not provided until months after funding is received. To further complicate things, guidance is continually changing.

Entities expending more than $750,000 of federal grant funding in a year are required to have a financial statement and compliance audit referred to as a Single Audit. Organizations without prior audit requirements may now have an audit requirement due to federal funding received/spent during 2020/2021. As these federal funds are new and have limited or changing guidance, receiving organizations should work with their accounting firms and granting agencies to ensure compliance. Proper documentation is also key in the future when granting agencies or auditors have questions.

Single Audits are conducted under Subpart F of the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. OMB annually issues a Compliance Supplement, which identifies compliance requirements and suggests audit procedures for numerous federal grant programs. The 2021 Compliance Supplement (July 2021), and an addendum for specific programs unrelated to commercial entities (December 2021) to address COVID funding.

One common grant received by healthcare service businesses was Provider Relief Funds (PRF). Entities that received monies include, but are not limited to, medical and dental practices, nursing homes, assisted living facilities, vision practices, and behavioral health practices. This money has been disbursed through several different phases. The first payments were deposited in bank accounts on April 10, 2020, and payments are continuing. 

The PRF expenses must have a direct COVID affiliation and cannot be reported as having been spent on PRF if already reimbursed from another grant. For example, if a business received a Paycheck Protection Program (PPP) loan that was reported as having been spent with payroll, those same payroll funds cannot be spent again on PRF. Most expenses are allowed to be charged to PRF if they are used in preparing for and/or responding to the pandemic. Additional examples include costs incurred to purchase personal protective equipment, barriers for social distancing, expanded hardware or software to allow for remote work by employees, or enhancing telemedicine, just to name a few. If payroll is being considered as a PRF expense, remember it must have a COVID tie. A nurse working a shift to treat non-COVID patients in the normal course of business is not allowable. 

In addition to COVID-related expenses, organizations can also use PRF monies for lost revenue. For these instances, businesses will enter quarterly information for two years into the Health Resources and Services Administration (HRSA) portal and lost revenue will be calculated based on quarterly figures. An entity might have more revenue in calendar 2020 than in 2019, but may have losses by quarter for the PRF lost revenue calculation.

Normally, federal funding is reported on a Schedule of Expenditures of Federal Awards (SEFA) when funds are spent. However, PRF funding is reported on the SEFA depending on when organizations are required to report in the HRSA portal. See table below for reference on when portal and corresponding SEFA reporting are required.   

Reporting in the HRSA portal is not allowed prior to the portal reporting period dates noted above. Additionally, if a business is unable to show the PRF funds as having been spent, the PRF funds must be returned within 30 days after the reporting time period. 

The OMB has indicated commercial entities will have different options to comply with the Uniform Guidance audit requirement for PRF monies than non-profit and governmental entities have. However, as of the date of this article, those options have not yet been released.

The compliance professionals at Ketel Thorstenson, LLP can help you navigate the Uniform Guidance requirements. Please contact us to answer questions and for additional guidance.

January 12, 2022
| Ketel Thorstenson, LLP
KT Insights
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Is My Employee Long-Term or Part-Time for Our 401k Plan? How Does This Affect Me?

The Setting Every Community Up for Retirement Enhancement (SECURE) Act resulted in a significant change to the definition of a part-time employee. In the past, employees working less than 1,000 hours in a plan year could be excluded from the plan, if elected by the Plan’s eligibility requirements. The SECURE Act establishes the new concept “long-term, part-time employee” (LTPT) for plan years beginning after December 31, 2020.

LTPT is an employee that has worked more than 500 hours, but less than 1,000 hours for three consecutive years and meets the Plan’s age eligibility requirements. Plans have time to prepare for this change – only plan years beginning after December 31, 2020 are counted for the three-year eligibility requirement. Although LTPTs do not become eligible until plan years beginning after December 31, 2023, plans must start tracking LTPT hours now to ensure proper compliance in 2024. Furthermore, the SECURE Act allows plans to let LTPTs into the plan before the end of the three-year period.

In addition, the Internal Revenue Service (IRS) also issued Notice 2020-68 about the SECURE Act, noting that for vesting purposes, all years in which the LTPT worked over 500 hours but less than 1,000 hours must be counted, even prior to December 31, 2020. However, the employer can still require 1,000 hours to be eligible for the company match and profit share.

Plan sponsors should consider the following:

  • Should the Plan allow LTPT employees to receive a match/profit share?
  • Should the Plan be amended to revise the Plan’s vesting requirements?
  • Should the Plan allow LTPT employees into the plan sooner than the eligibility period noted above?

It is important that plan sponsors start tracking hours for part-time employees. Plan sponsors should also work with their third-party administrators and counsel to ensure that plan amendments are made. Taking necessary actions now, and possibly making changes to the Plan, could prevent future mistakes.

This article was co-authored by Austin Eichacker and Kyle Kopren, Senior Managers in the audit department.

January 12, 2022
| Ketel Thorstenson, LLP
News
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KTLLP Announces Change In Management

KTLLP has announced a change in management. Denise Webster, CPA, PFS, steps down as Managing Partner of the firm on Jan. 1, 2022, and will return to a client service role. Starting in 2022 the firm will be managed by Nina Braun, CPA, CFE, as Chief Executive Officer (CEO), Jackie Maguire, CPA, as Chief Operating Officer (COO), and Steve Schacht, CPA, as Chief Financial Officer (CFO).

Denise served as Managing Partner for ten years. In that span the firm nearly doubled in revenue. As the firm’s first female Managing Partner, Denise was responsible for guiding the overall strategic direction of the firm as well as managing its daily activities. Due to Denise’s keen vision the firm has had tremendous growth over the last decade even in the midst of constant changing technology, tax reform, new legislation, virtual client meetings, and pandemic relief.

Denise has numerous achievements both in the industry and in the community over her tenure including being selected as one of the Top Ten Fabulous Women in the Black Hills in 2013 by Black Hills Woman magazine. She was featured in the Black Hills Lifestyle magazine in 2016 and was recipient of the Athena award from the Rapid City Chamber of Commerce that same year.

“As we celebrate KT’s 85th anniversary this year we are thankful for our longevity… and that is directly in part due to the dedication and strategic vision of our firm leaders like Denise Webster. We can’t thank her enough for her contribution to the firm and getting us to this next level,” said Nina.

Webster will continue at KTLLP as a partner focused on assisting clients in the tax planning and preparation, estates, gifts, and trusts.  She is excited to return to her roots.

September 24, 2021
| Ketel Thorstenson, LLP
KT Insights
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Rules for Deferral of Livestock and Crop Insurance Proceeds

Many farmers and ranchers have recently been impacted by major drought throughout most of the US. The IRS provides tax relief for these individuals by allowing for the deferral of income under certain circumstances. There are two options available when electing to defer income from livestock that have been sold on account of drought or other weather conditions:

Option 1: A taxpayer is eligible to defer excess 2020 sales of market and/or breeding livestock and report that amount in 2021. You must also meet the following criteria:

  • The principal business of the taxpayer is farming.
  • The taxpayer a cash basis taxpayer.
  • Drought, flood, or other weather conditions resulted in the taxpayers’ area being designated as eligible for assistance by the federal government.
  • The sale of the excess livestock would not have occurred if it were not for the weather conditions.

In general, IRS guidance uses the average of the number of head sold in the prior three years to calculate the “normal” year number of head sold.  This calculated average is generally used as a base to determine the number of head sold in excess of normal operations. Ketel Thorstenson can assist with this calculation to determine the amount of eligible deferral.

Option 2: This option applies only to livestock used for breeding or draft purposes. This option uses the involuntary conversion rules. As such, taxpayers are given a period of two years to replace the livestock they were forced to sell. The replacement period is extended to four years if the taxpayers’ area has been designated as eligible for assistance by the federal government.

There are a few rules that a taxpayer must follow when replacing their livestock. The replacement livestock must be the same type and the same sex as the deferred livestock. For example, breeding cows must be replaced by breeding cows, and dairy cows must be replaced by dairy cows. The number of head replaced does not have to be the same amount as the number of head deferred. Instead, the taxpayer must spend replacement costs equal to the dollar amount of the deferred gain.

In some cases, it may not be feasible for a taxpayer to reinvest the deferred gain back into livestock. If this is the case, the taxpayer is allowed to replace the deferred livestock with other tangible property, which can include vehicles and equipment.

An amended return will need to be prepared for the deferral year to report any deferred gain not replaced by the end of the deferral period.

However, and generally speaking, is not a good idea to defer gains for excess sales of raised cows.  If you don’t defer, you report capital gains when the cows are sold, and you deduct the replacement cows against ordinary self-employment income when purchased.  By not deferring, the difference between ordinary and capital gain rates may save you tens of thousands in tax.   But is painful to pay the capital gains tax now, when the benefit of the deduction might be a few years in the future.

Deferral of Crop Insurance:

A taxpayer is also able to defer crop insurance proceeds for one year, similar to Option 1 for livestock. In order to qualify, it must be customary practice for the taxpayer to sell more than 50% of  the crop in the year following the harvest. They must also meet the previously mentioned criteria in Option 1.

These deferral options can provide much needed tax relief to farmers and ranchers who are already facing tough times.  However, the process can be complicated as there are many regulations, elections, and tests that apply. In addition, deferral may not always be advantageous based on type of livestock sold, future years income being greater than current year, future tax law changes, economic conditions, etc. Please don’t hesitate to contact your tax professional at Ketel Thorstenson if you believe you may be eligible for any of these deferral options. We are here to help you through this process.

September 24, 2021
| Ketel Thorstenson, LLP
KT Insights
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Provider Relief Funds Reporting Assistance

Beginning April 10, 2020, entities within various facets of the healthcare industry (medical, dental, behavioral health, nursing homes, etc.) and certain governmental entities began receiving Provider Relief Funds (PRF).  These funds were electronically deposited and, depending on when received, have specific reporting requirements to the Department of Health and Human Services (HHS).  The reporting portal had its long-awaited opening on July 1, 2021. Any entities that received an aggregate of more than $10,000 in any “payment received period” (see table below) must report within the defined reporting periods to HHS.  Please utilize the table below for specifics on dates received vs. reporting periods.  The portal is requiring specifics to be reported regarding how the funds were spent, methodologies used, etc.  A lack of reporting within the portal could lead to the PRF funds needing to be returned to HHS.

Depending on which PRF funds were received, as well as how they were spent, the complexity of reporting changes accordingly and Ketel Thorstenson is here to help.  We can assist by working with you and your team to obtain the proper information needed to report, as well as entering information into the portal.

July 21, 2021
| Ketel Thorstenson, LLP
KT Insights
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Still Waiting for Your Refund?

When you filed your 2020 tax return did it show a refund? Are you still waiting on that refund? If you answered yes to both questions, you are not alone. There are many taxpayers across the country still waiting for their tax refund.

The Stats…

The IRS is experiencing more backlog and congested phone lines than it has ever experienced in the past. They currently have a backlog of 35 million unprocessed individual and business returns that require manual processing – 35 million – paper tax returns! This is more than 5 times as many returns than were manually processed in 2019. As for phone calls, the IRS received more calls during the 2021 tax filing season alone than it has ever received in a full fiscal year. This is roughly 4 times as many calls as in the 2019 tax season. These statistics help bring to light the struggle the IRS is facing.

The Factors…

In addition to the stats above, it was reported that some 3.7 million returns were flagged as suspicious as of May 2021, compared to just 1.3 million in 2019. Of the 3.7 million returns, less than half are paper returns and the rest consists of returns that were suspended during processing and require further review. The main reasons for a return to be flagged include 1) discrepancies between the recovery rebate credit (stimulus) claimed by the taxpayer and what the IRS records indicate the taxpayer received and 2) the IRS is double checking returns where the taxpayer elected the option to use their 2019 earnings amount instead of their 2020 earnings to claim a larger earned income tax credit or additional child tax credit. The CARES Act made this election to quickly provide refunds where needed, but it is now causing these taxpayers to have the opposite effect and have delayed refunds.

The Results…

Unfortunately, at this point, the best suggestion we have is patience. All you can do is wait for the backlog to clear. Calling the IRS will not help the situation or speed up your refund. Currently the IRS is experiencing an overload of phone calls. If you decide to give them a call it will result in either getting the “sorry we do not have time for your call” automated response, hold times for over 2 hours, or if you do reach a representative your call may be dropped.  There is no information that the agent can provide you that you cannot look up yourself using the “Where’s My Refund” page at https://www.irs.gov/refunds.

The 2020 tax return filing season has been hard on the IRS and on the taxpayers. Ketel Thorstenson, LLP has been here through it all and we are here to help.

July 15, 2021
| Ketel Thorstenson, LLP