Author: Ketel Thorstenson, LLP

Thank you to all our clients for enduring another tax season with us!  Even though you might not like the task of filing tax returns and gathering the tax documents together, we do enjoy digging into the details so we can not only report it properly to the IRS, but also be creative to come to the lowest tax possible.  The best part of our business is seeing and talking with you again; relationships are so important.  Communication is key and the more you can tell us about what you are doing, the better we can analyze the daily transactions and report them appropriately to the IRS.  The easiest example would be meals expense.  If you travel for business or have a business lunch out of the office, your meals are limited by 50%.   Meals provided on the employer’s premises for the employer’s convenience is 100% deductible.  Employer-provided social or recreational expenses for the benefit of employees who are not highly compensated, such as a summer picnic or holiday party is 100% deductible.

As you might know, the tax season is being compressed starting around March 1st to April 15^th.  Most of this is due to the timing of when we receive 1099s from investment companies and Form K-1s from public companies and/or other partnerships or S corporations you own.  The normal process to successfully get through tax season is preparing corporate returns, which are due March 15 then prepare partnership and individual returns by their due date of April 15.  Another complication to tax seasons is preparing agriculture individual tax returns by March 1^st as they follow special rules. Your patience through the season is greatly appreciated.

You can help us get through tax seasons more efficiently by letting us prepare your partnership and corporate tax returns in January and February, if possible.  And if you have your individual tax documents ready, please let us know. You can come in before your prescheduled appointment.  We like to complete tax returns as soon as possible – it is our mission!

It is now June and 5 months of 2015 are gone.  We have a staff of over 100 accountants that can help you with your ongoing accounting needs.  Do you have bookkeeping issues, are you selling or buying a business, do you need your business valued or hiring employees in multiple states?  We can assist you with your projects and questions. We love to be challenged outside of tax season also!

Most important is telling you that we appreciate you as clients of the firm.  Next year Ketel Thorstenson will celebrate 80 years in business.  That does not happen without great clients like you.  We hope 2015 is a healthy and profitable year for you and your business.

As a business owner, it is important to consider the forces that drive the value of your business up (or down).  Exploring these factors will help you focus on doing more of the good things that will allow your business value to grow in the right direction!

One factor is COMPETITIVE ADVANTAGE.  Overall business value is increased by the components that make your business special.  Is it having a really cool product or simply a good product but at a lesser price?  Are all things equal with your competition except that you provide phenomenal customer service?   It can be as simple as having better parking or easier access.  At the end of the day, there are a finite number of patrons to your business.  Showing patrons the reason to visit your store versus your competitors’ will translate into greater cash flows; and consequently greater value.

Having a superior REPUTATION will also surge value.  Businesses that have repeat customers and free word-of-mouth advertising are generally more successful.  The businesses that have the phone ring or door open simply because “Jane said you are the best” will lend themselves to lower advertising costs, greater cash flows, satisfied customers and employees and typically a sustained longevity in the business.

Another force driving up business value is having enforceable NON-COMPETE AGREEMENTS with key employees.  Of course it depends on the type of business, but these agreements are most important for those businesses that thrive on the relationships that key employees have formed with top-tier customers.  Although they may be difficult to enforce, the employees who have signed non-compete agreements may think twice about leaving your business to put up their own shingle and pilfer your customers in the process.  Another way to combat this risk is to offer a small OWNERSHIP interest in your company.  What better way to entice your key employees to work harder and deepen customer relationships than to make him/her a part owner?!  It conveys your trust and loyalty to the employee which will likely be reciprocated tenfold.  Moreover, a partner can be bound to a non-compete commitment as part of a buy-sell agreement.

Of course reducing RISKS and optimizing strengths and opportunities are sure-fire ways to increase overall business value.  Stay tuned to the next publication of The KT Addition to read more about risk, business valuation and strategic planning!

Do you or your clients have Business Valuation questions?  Call the KTLLP Business Valuation Team today for answers.  This is the second in the series of Business Valuation Strategic Planning articles.  Watch for the rest of the series in upcoming KT Addition newsletters.

The hot topic buzzing around our office is the difference between QuickBooks Online and QuickBooks Desktop.  It has people asking, “Which one is right for me?”

It can be challenging trying to find the right software.  Each one has its benefits and drawbacks compared to the other one.  The following table outlines some key comparative aspects.

As you can see, there are many features and elements to consider when determining the right fit for your company.  Kia Smith and Kim Logsdon, two of our QuickBooks ProAdvisors, can assist you with comparing these two software options. They can be reached at our Rapid City office at (605) 342-5630.

Ketel Thorstenson, LLP announces the addition of a new Partner, Traci Hanson, CPA, effective July 1, 2015. Hanson joined the firm in June 2001, specializing in the areas of governmental agencies, schools, municipalities, rural electric cooperatives and non-profit organizations.  She serves both for-profit businesses and non-profit organizations through the Audit Services Department. Her responsibilities include: governmental accounting and auditing standards research and implementation, governmental and non-profit accounting assistance, pre-audit services, internal control studies, preparation of governmental financial statements, and Form 990 preparation.

Hanson is a Junior Achievement volunteer.  She is also a member of the South Dakota CPA Society and the American Institute of CPAs. Hanson graduated Summa Cum Laude with a Bachelor of Science Degree in Accounting and Business Administration from Black Hills State University.

We want to wish Fred Krush all the best in retirement. We will all miss having him around!

Fred joined Ketel Thorstenson, LLP in November of 2005. Previously, he served as the Director of General Services for McGladrey & Pullen in Rapid City. With experience in financial reporting, tax compliance, and tax planning, Fred has served 47 years as a CPA.

Fred plans to fill his days with plenty of fishing, hunting and time with grandkids. Enjoy Fred, you have earned it.

We just saw a report from the American Institute of CPAs that found 25 percent of Americans fell victim to information security breaches in the past year. That compares with just 11 percent in the previous year.

The 2014 income tax season, the first since the Affordable Care Act became law, proved to be a bumpy ride for many people who received government help to pay for health insurance. One major tax service reported that 61 percent of its clients who used the federal subsidy in 2014 saw their tax refunds reduced by an average of $729, because they underestimated their expected 2014 income.

Employers with questions about how to administer an employee 401(k) program or how to comply with the Affordable Care Act will find answers at an upcoming meeting with Fran Gray of the U.S. Department of Labor.

The Journal of Accountancy, a respected industry publication, ran a story last week titled “You Made Partner: Now What?” It featured advice from accountants at firms in New York, Austin, Salt Lake City and Rapid City — Ketel Thorstenson’s Jean Smith.

When you meet with your tax professional to help you prepare your income tax return, the process will go smoothly if you organize your paperwork beforehand.