Returning Value Blog

The past few years of pandemic recovery, rising inflation and interest rates, and legislative changes have created tremendous shifts and challenging obstacles within the real estate industry. As economic uncertainty applies pressure to sources of traditional capital, the industry is turning to private capital and small and regional banks while managing a decline in government funding.

Healthcare Has a Margin Erosion Problem

The past few years have significantly destabilized the healthcare industry’s financial footing. According to our 2023 Healthcare CFO Outlook Survey, 60% of healthcare CFOs could not meet the terms of their bond or loan covenants in 2022 — up from 41% in 2021.

Accrual-basis financial statements are considered by many to be the gold standard in financial reporting. But with the increasing cost and complexity of today’s accounting rules — particularly the updated lease guidance that went into effect last year — some private companies are seeking a simpler alternative to U.S. Generally Accepted Accounting Principles (GAAP). The solution for some is to switch from accrual to income tax-basis reporting.

It’s common for high-growth and seasonal businesses to have occasional shortfalls in their checking accounts. The reason relates to the cash conversion cycle — that is, it takes time to collect on customer invoices. In the meantime, employees and suppliers want to get paid. The “cash gap” is currently getting wider for many companies. A recent study by CFO / The Hackett Group shows that the cash conversion cycle increased from 35.2 days in 2021 to 36.4 days in 2022. To add insult to injury, interest rates, and many operational costs are rising.

Stakeholder demands for companies to commit to clear environmental, social, and governance (ESG) goals and targets have become commonplace.

In addition to strengthening stakeholder relationships, setting goals and targets can help companies further their corporate sustainability strategies, improve operational and financial performance, enhance credibility, and achieve other benefits.

Tax Strategist Insight

For individuals seeking to minimize taxes while also transferring wealth to the next generation, the income tax benefits provided under Internal Revenue Code Section 1202 can match up well with estate planning efforts. Section 1202 permits a taxpayer other than a corporation to exclude from taxable income a specified percentage of gain – and potentially the entire gain – from the sale or exchange of “qualified small business stock” (QSBS) held for more than five years. In addition, with proper planning, each recipient of a gift of QSBS is also eligible for the gain exclusion.

If your profitable business has trouble making ends meet, it’s not alone. Many business owners mistakenly equate profits with cash flow, leading to shortfalls in the checking account. The truth is that there are many reasons these numbers might differ.

The U.S. government has repeatedly revised the requirements for U.S. taxpayers to claim the Employee Retention Credit ("ERC"), also commonly known as the Employee Retention Tax Credit, since its initial codification into law. As a result, many eligible taxpayers have been left uncertain as to whether they may properly claim this often-valuable tax credit. Because there is a strict statute of limitations on claiming the ERC, potentially eligible taxpayers that have not already claimed the ERC should review their eligibility under current U.S. law as soon as possible.  

Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2023. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

Whether you’re operating a new company or an established business, losses can happen. The federal tax code may help soften the blow by allowing businesses to apply losses to offset taxable income in future years, subject to certain limitations.