In this video, Maria Gordon, Tax Supervisor of State and Local Taxation, sheds light on the crucial topic of tax incentives offered by states and localities to businesses. From empowerment and edge credits to research and development incentives, she underscores the vast array of opportunities available.

Transcript:

My name is Maria Gordon. My title is Tax Supervisor of State and Local Taxation. Businesses should really be thinking about tax incentives that many states and localities offer to them.

The states really want to see economic development in their state and even certain areas, and so often they will offer empowerment, credits, edge credits where your business is employing people there, investing in capital. And these credits are very specific. You apply for it with the state. And then it helps businesses to really expand and get some credit, some benefits there. And some states offer, you know, research and development credits. You can get that at the federal level, but if you are also doing research and experimentation in a state, you may be able to receive a state -level credit as well.

And then there’s even states that have credits that have to do with your activities such as the Wisconsin Manufacturing Tax Credit, that’s a credit against income tax. So, there is an awful lot out there with respect to state incentives and if a business isn’t thinking about these things, they really could be missing out on some benefits.

One benefit that business owners have had had for the last couple years is taking advantage of the pass-through entity tax, which is a tax whereby the business can pay state income tax at the entity level rather than having it paid at the individual level for partnerships and s-corporations where the income would generally flow through to the owners.

Now as a workaround to the state and local tax deduction cap, businesses can pay those at the entity level and get a state tax deduction against the business income. For most states, this is set to expire after 2025. So, we’re doing all we can to take advantage of those deductions right now.

I think the hope is that some of these states will extend that provision, but as of now for most of them it’s expiring 2025 and this is just an issue that we’re going keep up on and make sure we know all the changes that are happening over the next couple of years.

What is outsourced accounting? It is generally defined as an option for a business to hire an outside third party to complete accounting and finance functions for the organization. This can include but is not limited to bookkeeping, accounting and compliance work. It typically can encompass accounts payable and receivable and payroll as well as month-end closing tasks such as reconciliations and bookkeeping and tax and compliance preparation. Increasingly common are other engagements such as financial reporting, budgeting, financial planning as well as ad hoc projects, advisory and consulting services. Business owners seeking more time to focus on their core business are increasingly turning to firms such as Cray Kaiser that can do everything from performing the bookkeeping and accounting tasks to providing CFO-level financial analysis and advice.

In the past, accounting and finance was a function that was required to be in-house for access to records and other company resources and employees. Outsourcing is losing its stigma. The negative connotations associated with hiring out tasks are fading as the pace of life accelerates, work-life balance priorities shift, entrepreneurship expands, and business challenges grow increasingly complex. With the availability of cloud-based software and advances in technology, outsourced accounting has become easy to implement and is a proven time and cost savings for many businesses. Our firm can be on the same system and remotely share files and documents, allowing for real-time conversations. Owners of small businesses gain valuable time to focus on growing their business instead of managing and running the accounting functions. Businesses benefit from cost savings and efficiency by considering outsourcing many of the accounting functions to a team of specialists that offer expertise and flexibility to meet business needs as they change.

Some thoughts about the positive impact of outsourced accounting so you can grow your business not your management of accounting functions:

• Advertising, recruiting, hiring and training of competent accounting department personnel is reduced or no longer needed.
• Greater access to specialized expertise and seamless coordination with other areas of our firm. 
• Access to proven processes and streamlining of responsibilities and expertise.
• Flexibility to meet your business needs as they change from month to month and year to year allowing personalized service.
• Seamless and timely integration between bookkeeping tasks to accounting and financial reporting and tax preparation.
• Agreed upon division of responsibilities between owner, employees and outsourced firm can improve internal controls.
• Access to a dedicated team of specialists with current knowledge, experience and training in software, processes, technology.
• Option to start small – services and additional responsibilities and advisory or consulting projects can be added after a relationship, familiarity and trust is built.

Important considerations when reviewing outsourcing options and engaging a firm:

• Costs
• Expertise and niche area of accounting firm
• Create a plan of which tasks and roles need to be outsourced
• Create a service level agreement – maintaining an element of flexibility
• Open communication about the needs and responsibilities of all parties involved
• Technology and resources available

Cray Kaiser can help – let’s start a conversation as to how best to help your business grow and gain efficiencies in order for you to reach the ultimate goal of focusing on your core business and areas of growth. If you feel now is the best time to learn more about outsourcing your accounting department give us a call at (630) 953-4900 to discuss options and opportunities offered in our Accounting Services Division.

We are proud to share the promotion of Natalie McHugh, CPA from Manager to a Principal/Shareholder at Cray Kaiser.

With an impressive career spanning over 25 years, Natalie has amassed a wealth of experience. She began her career at CK as a Tax Manager, providing comprehensive tax planning, compliance, and consulting services. Her passion for her work shines through, particularly in moments perceived as “scary,” often involving the IRS. Natalie takes pride in leveraging her expertise to assist clients in all aspects, providing holistic tax guidance on the business, individual, trust and estate platforms. Her promotion to Principal reflects her dedication and expertise in navigating the intricacies of taxation for the benefit of CK and its clients.

Natalie’s journey into accounting was serendipitous, discovering her passion during her first year at DePaul University. Through her first internship, she realized that accounting is not merely about numbers but revolves around individuals. This realization has remained a driving force throughout her career, evident in every interaction with colleagues and clients. Natalie’s promotion to Principal reflects her dedication and ability to combine her love for numbers with a genuine connection to people.

Please join us in congratulating Natalie on her new role at CK!

Designations

• Certified Public Accountant (CPA)

Memberships & Associations

• American Institute of Certified Public Accountants (AICPA)
• Illinois CPA Society (ICPAS)

Education

• Bachelor’s degree in Accounting from DePaul University in Chicago, IL

In Cray Kaiser’s Employee Spotlight series, we highlight a member of the CK team. We couldn’t be prouder of the team we’ve grown and we’re excited for you to get to know them. This month we’re shining our spotlight on Steve Benzinger.

GETTING TO KNOW STEVE

Steve is an In-Charge Assurance Accountant at Cray Kaiser. His role includes assisting staff in completing their responsibilities while serving as a point of contact for the client. His day-to-day consists of participating in compilation, review, and audit engagements, primarily performing detailed testing of areas such as accounts receivables/payables, expenses, cash – during reviews/audits. During compilations, Steve leads the preparation of the client’s financials and assists in classifying transactions.

Steve joined the CK team in November of 2023. He was most excited about joining a team large enough to serve as trusted advisors to clients while also being small enough to connect personally with clients and identify areas of growth and change. He enjoys working directly with the Principals and Managers on a daily basis and having the opportunity to learn from those around him.

Before joining CK, Steve worked for two years at Grant Thornton. He received a Bachelor of Accountancy from Northern Illinois and holds a CPA in Illinois.

WHY CK?

Steve finds the opportunity to work closely and learn from the knowledgeable people who make up the CK team invaluable. So, it’s no surprise that the CK values that resonate the most with him are Education and People. Steve said, “Trying new things can be uncomfortable and challenging, and this is how one develops.”

When asked about advice he would give to someone just starting in the accounting industry, Steve suggests being open to new opportunities. He said, “Find what speaks to you and lean into it. Be willing to ask questions.” He also wants people new to the industry to understand that they won’t know everything immediately and that’s okay.

While there have been many notable moments in his career, Steve revealed that his most impactful moment has been passing the CPA exam. That achievement was a culmination of many late nights and weekends of studying. 

MORE ABOUT STEVE

If you could be an expert at anything, what would it be and why?

Cooking! I like to eat and have recently been moving away from pre-prepared/heavily processed foods. Living away from family/parents will do this – My body and wallet thank me!

How do you like to spend your weekends/time off? Bonus question: what do you want to do most when tax season is over?

I like to cook and try new recipes. I recently have been working on a recipe for chicken drumsticks that I can make large batches to have for lunches and dinners. I also like to play trivia.

When tax season is over, other than sleeping, I hope to expand on my cooking capabilities.

What motto do you live by?

No one is perfect – It is okay to make mistakes, so long as you learn from them.

Comparison is the thief of joy – Looking to others and what they have and know does not lead to fulfillment. People learn and develop at their own pace and comparing yourself to what others have done can lead to despair. Be proud of what you have accomplished in your own sense.

Tell us about your family.

My father owns a print shop, my mother is a kindergarten teacher, and my brother is a chemist. My family has a cat named Phoebe, a Nebelung breed. My girlfriend likes to say that I have a stepson, her German Shepard, named Chunga.

Do you have a special/hidden talent or hobby?

I played competitive dodgeball in college. This was a great way to relieve stress and meet people from other areas of the school.

What’s your favorite movie or tv show?

Arrested Development – the absurdity of the situations is hilarious.

Reservoir Dogs (anything from Tarantino), Blade Runner, Fear and Loathing in Las Vegas, Grand Budapest Hotel (anything from Wes Andeson), Bill and Ted’s Excellent Adventure.

What’s on your music playlist?

Sum 41 – I have seen them live three times, it is always a high energy affair, and you will find me in the mosh pit!

Primus – Never a dull song, unique absurdity around every corner.

Iron Maiden – I appreciate the story telling along with the fast-paced guitar and drums.

What’s the last book you read?

The last few books I’ve read include Valley of the Dolls, The Princess Bride, Fight Club, and Requiem for a Dream.

In the complex landscape of state taxation, businesses face a myriad of challenges as they navigate the ever-evolving requirements imposed by each state. Watch the above video where CK Tax Supervisor of State and Local Taxation, Maria Gordon, talks about the broad spectrum of activities that can establish nexus and the critical roles played by services, vehicle presence, and employee locations when it comes to paying state income tax.

Transcript:

My name is Maria Gordon. My title is Tax Supervisor of State and Local Taxation.

Each of the states really wants to get a piece of their pie from taxpayers. There’s lots of different types of taxes that businesses need to be concerned about. Income tax is an obvious one, but also requirements for sales taxes are continually changing with the states. And then we have local income taxes. We have personal property taxes, and even gross receipts taxes based upon total receipts collected in a state and franchise taxes.

Businesses need to be concerned about whether or not they have enough connection with the state to be required to file income tax and that connection is called nexus. Each state has their own specifics about what creates nexus within their state, but very generally speaking for income tax, if a business is performing any sort of services in a state, then they’re going to be required to file income tax there. If they are driving their own vehicles into a state, then they would have nexus. Really, the one instance when a business does not have to worry so much about income tax is if they’re merely shipping products to customers in the state, and that’s their only activity. They may have salesmen in the states, but as long as those salespeople don’t do any services, then generally speaking, the business won’t have nexus with the state. We often ask our clients each year, what the activities look like in states where they have employees, and then we make that determination on a state-by-state basis.

The landscape of workers has changed a lot over the past 10 years. A lot of companies now have remote workers in states where they may or may not have filed in past years and so it is something to be concerned about and it all depends upon what activities the employee is doing for that business as to whether or not that’s going to trigger a nexus with the state. So it is very important to be mindful when you’re adding new employees in states or if an employee who works from home is moving to another state, you always want to take a look at those state requirements to find out if the business would suddenly be responsible for income tax filing.

So if a business determines that they have nexus within a state for income tax, then they need to determine what is their taxable income in that state. And we start with federal taxable income and then each state has their own modifications that they make to federal taxable income. Some really common ones are depreciation of fixed assets. States have different methods of depreciating than what’s allowed on your federal tax return. The states do not allow certain deductions like state income tax deduction. So once you make those modifications to the federal taxable income, then at that point you need to decide which portion of this is going to all of these different states. And there are formulas that the states use for that. Most of the time, it’s just looking at sales to that state versus everywhere.

But there are also states that take a look at the amount of payroll that you have in each state and property. So once you come up with that percentage, you’ve got your state taxable income.

It’s important to remember that when you add a state filing responsibility, if you kind of look at the whole pie, you’re not necessarily paying more state tax, it’s just a question of which state are you paying that tax to. And certainly there are some states with higher tax rates that it’s less favorable to file in those states but it’s best to kind of think of it as a pie and as long as you’re filing where you’re required to then that protects the business going forward.

Recently, I was approached with a simple question, “How do you feel about giving a presentation to high school students for Career Day?” My initial reaction, in true accountant fashion, was, “What is the date? I hope this doesn’t interfere with the October 15th deadline.” Then, the more I thought about it, the more excited I became at the opportunity to stand in front of students and speak about the exciting world of accounting. Yes, you read that correctly: the EXCITING world of accounting.

How do I reach these kids? How do I make my presentation fun and interactive? What do I wish I knew when I was that age? Why accounting? What if I am not asked to come back next year? I had all these questions that needed answers. The future of the entire accounting profession was relying on my presentation. Okay, maybe I am overexaggerating slightly, however, my goal was to give a fun presentation to get young minds interested in learning more about the accounting profession. 

I began my presentation with a brief introduction and immediately asked the students what they thought of when they heard the word ‘accountant.’ We all laughed at the fun and exciting stereotypes surrounding the accounting profession. These were too great not to share:

• Boring and dull.
• Sit in tiny cubicles and stare at a computer screen all day.
• Count money.
• Solve math problems all day.
• Prepare tax returns.
• Secret agents using their goods looks and ninja training to fight crime (this one is actually true!)

Besides laughing with the students and getting them to open up, there was an important takeaway from this exercise. We, as an accounting profession, need to do a better job sharing our experiences and the opportunities that await  students considering going down the accounting path.    

• Travel opportunities – Working at larger, national firms provide the opportunity to travel and work in cities across the country. We get to tour the factories and plants to see the company’s operations and how ‘things’ are made.
• A variety of businesses and industries – Behind every business (big or small) there is an accountant. I joked with the students, ‘We are Everywhere.’ If you are interested in learning how business works in a variety of industries, accounting is your friend.
• Problem Solving – As the bulk of my audience consisted of math students, I spoke about the problem-solving skills they were learning in high school math class. We, as accountants, are called to solve problems. Whether it is creating a tax planning strategy for our clients or applying a new accounting standard to their financial statements, we lean upon the critical thinking skills we learned in math class to get us through. 
• Educating and Collaborating – As accountants, we are lifelong learners and work together as a team to serve our clients. The opportunity to learn and grow is present each day, along with the privilege of sharing this knowledge with others.

After conveying these experiences and opportunities to the students, I realized my time was running short, so I challenged them with the following:

Next time you meet with your guidance counselor, make sure you sign up for the accounting course offered at your school. But I am warning you, speaking from personal experience, you may fall in love.

In 2017, the Tax Cuts and Jobs Act (TCJA) introduced limiting state and local taxes (including real estate taxes) to $10,000. Prior to this legislation, state and local taxes were usually deducted in full on individual income tax returns. As a result of this legislation, many Americans, especially in high tax states or those owning their own business, lost the ability to itemize their deductions. 

Many states have worked around this limitation by allowing owners of passthrough entity businesses the ability to deduct their share of state taxes on the business return itself, reducing total profit and thereby giving a back-door deduction for business owners. This is commonly referred to as a pass-through entity tax (PTET) deduction and many states have allowed it, including Illinois, Indiana, Michigan, and Wisconsin. While this back-door deduction is a benefit for business owners that have profitable pass-through entities, it doesn’t benefit those without businesses or those living in states with higher state taxes, such as California, New York, New Jersey, Connecticut, Maryland and Illinois. 

Change of Heart

This legislation has been controversial since it was introduced and is expected to sunset (expire) in 2026. The current 118^th US Congress, primarily the House of Representatives, has three bills before it that would liberalize the current itemized deduction limitation on state and local taxes. 

What are the Bills?

In short, the three bills have different outcomes. One bill proposes to eliminate the limitation altogether, which would result in the full deduction of state and local taxes paid during the year. The second bill proposes to increase the limitation from the current $10,000 to $100,000 for single filers and $200,000 for married filing jointly. The final bill proposes to modestly increase the cap for married filing jointly to $20,000 but retain the current $10,000 limitation on single filers. 

What’s Next?

Congress has squabbled over many policies and bills during the recent years, and to expect a clear decision anytime soon does not seem likely. As taxes have become politicized, the outcome of the full repeal of the SALT limitation prior to 2026 does not seem likely. However, we will continue to monitor the status of the other two bills which would at least raise the cap on the limitation of state and local taxes. The outcome of either bill progressing significantly could bring about a substantial change in limitations.

While any proposals in Congress, especially tax changes, can cause confusion, Cray Kaiser is here to help you navigate potential pitfalls and opportunities. Please contact us at 630-953-4900 with any questions.

For tax years beginning January 1, 2024 there are big changes to the Ohio Commercial Activity Tax (“CAT”). For one thing, the CAT annual minimum tax is being eliminated. More importantly, the receipts exclusion is increased from $1 million to $3 million for 2024 and will be increased to $6 million for 2025. Taxpayers having 2024 calendar year Ohio gross receipts of $3 million or less will no longer be subject to the CAT. The CAT rate remains unchanged at 0.26% and will apply to Ohio gross receipts in excess of $3 million.

What does this mean for your business? If you expect your 2024 Ohio gross receipts to be under $3 million, you must close your CAT account. Failure to close the account could result in non-filing notices. You may close the CAT account online by visiting the Ohio Business Gateway. Select the CAT Cancel Account transaction and indicate a closure date of December 31, 2023.

Remember to file your final CAT return for tax year 2023! CAT filing deadlines are:

• February 12, 2024 for quarterly filers
• May 10, 2024 for annual filers

Ohio is just one of many states that imposes a tax on gross receipts. Cray Kaiser can help your business evaluate the impact of these types of taxes on your business. Contact us by calling 630-953-4900 and one of our State and Local Tax professionals will be happy to provide assistance.

We are pleased to announce Deanna Salo, Managing Principal at Cray Kaiser has been named a 2024 Chicago Titan 100. The Titan 100 program recognizes Chicago’s Top 100 CEO’s & C-level executives. They are the area’s most accomplished business leaders in their industry using criteria that includes demonstrating exceptional leadership, vision, and passion. Collectively, the 2024 Chicago Titan 100 and their companies employ upwards of 325,000 individuals and generate over 42 Billion dollars in annual revenues.

“The Titan 100 are visionary leaders that inspire the Chicago business community. These preeminent leaders have built a distinguished reputation that is unrivaled and preeminent in their field. We are humbled to recognize the Titan 100 for their efforts to shape the future of the Chicago business community” says Jaime Zawmon, President of Titan CEO.

Deanna has been a CK Principal since 2001 and a Managing Principal since 2021. She executes assurance, strategic and tax planning services across the client portfolio. For closely-held and family-owned businesses, she focuses on the value she can bring to the family and owners. For nonprofit clients, she instills best practices in budgeting, governance issues and audit compliance procedures. Using her technical and creative talents, Deanna also performs M&A engagements for the buyer and seller sides.

 When asked her thoughts about becoming a 2024 Chicago Titan 100, Deanna responded, “Success is not just about achieving personal goals; the Cray Kaiser way is to inspire and uplift others along the way. As a Chicago Titan 100 recipient, I believe in the power of collaboration, innovation, and a relentless pursuit of excellence. Together, we can shape the future and leave a lasting impact on our community and beyond.”  

In Cray Kaiser’s Employee Spotlight series, we highlight a member of the CK team. We couldn’t be prouder of the team we’ve grown and we’re excited for you to get to know them. This month we’re shining our spotlight on Jacob Suchecki.

GETTING TO KNOW JACOB

No day at CK is ever the same for Jacob in his role as Staff Accountant. His day is centered around conducting financial audits and providing assurance to clients. Whether he is audit planning, conducting data analysis or testing to ensure compliance with accounting standards, Jacob’s expertise of attention to detail shines through. 

Jacob started his journey at CK as an intern in February and joined the team full-time in May. He was immediately drawn to the dynamic and collaborative work environment. The CK team’s commitment to professional development, team-oriented culture, and the opportunity to gain valuable experience were all key factors that fueled his excitement to join the company.

WHY CK?

When asked which core value means the most, Jacob answered, “Integrity. While all the values are important, integrity aligns with the ethical standards and professional conduct which is important to the accounting and assurance field and remains a fundamental part of my role.” Jacob continued, “In order to keep client connections and guarantee the accuracy and dependability of financial information, it is crucial to value integrity which includes honesty, ethics, and transparency.”

Jacob enjoys his role at CK and remains at the company because of the support he receives for his professional growth and the strong ethical standards CK upholds. He also appreciates the opportunities to work with diverse clients from various industries, which keeps his job interesting.

Before CK, Jacob received his bachelor’s degree in accounting from Saint Xavier University. While pursuing his degree, he interned for a small accounting firm that allowed him to experience the accounting field. He plans to continue his education and pursue his CPA.

When asked about a piece of advice he would give to someone just getting started in the accounting industry, Jacob answered, “As someone who is just starting in the industry, I would advise focusing on education, staying up to date on industry changes, and honing the skill of paying attention to detail. Developing strong communication skills to build professional connections by networking and applying to internships is how I was able to land an internship at CK.” He continued, “Finally, setting clear career goals and committing to lifelong learning will help you succeed and thrive in the accounting field.”

Jacob’s favorite CK group outing was when they participated in a golf outing in August. The outing was the perfect opportunity for team building, relaxing, and stress relief. It also provided a great space for networking with colleagues. The outing contributed to a more cohesive and enjoyable work environment, making it a memorable experience.

MORE ABOUT JACOB

Tell us about your family.

My parents both came from Poland when they were teenagers. I have two younger brothers who are 19 and 17. My family is a big fan of soccer and golf.

Do you have a special/hidden talent or hobby?

The hobby I love doing is golf. Being outdoors for 4-5 hours with family and friends is what I love most about golf.

What is your favorite vacation? Or what is the #1 place on your vacation list?

The #1 place on my vacation list is to travel to anywhere in Europe. My plan would be to backpack throughout Europe and get to experience every country. Since I am big soccer fan, I would also love to go experience a game in Europe.

What’s the last book you read?

The last book I read was ‘Rich Dad Poor Dad’ by Robert Kiyosaki. The book provided valuable insights on financial literacy and investments, emphasizing the importance of financial education.