MLR

Category: Special Publications

Accounting for Business

Welcome to our Resources section, where you will find articles pertaining to accounting for business, business financial planning, financial advice, and the industries of our clients.
This section is a great source of information, but please contact us if you feel you need professional financial advice. Maxwell Locke & Ritter is here to offer trusted guidance.

Year-end planning for 2018 takes place against the backdrop of a new tax law — the Tax Cuts and Jobs Act (TCJA) — that was passed last December and that made major changes to the tax rules for individuals and businesses. For businesses, the corporate tax rate is cut to 21%, the corporate AMT is eliminated, there are new limits on business interest deductions and the deduction of pass-through business losses, significantly liberalized expensing and depreciation rules, and there is a new deduction for non-corporate taxpayers with qualified business income from pass-through entities.  Also, in the foreground is the possibility of new tax legislation being passed before or after year-end.

Year-end planning for 2018 takes place against the backdrop of a new tax law — the Tax Cuts and Jobs Act (TCJA) — that was passed last December and that made major changes to the tax rules for individuals and businesses. For individuals, there are new, lower income tax rates, an increased standard deduction, new limitations on certain itemized deductions and the elimination of personal exemptions, a significantly increased exemption for the alternative minimum tax (AMT) and the estate tax, and many other changes. Also, in the foreground is the possibility of new tax legislation being passed before or after year-end.

The standard financial due diligence process focuses on providing potential investors with an understanding of a company’s sustainable EBITDA, historical operating trends, working capital needs, and accounting policies and procedures.

However, access to the C-suite during fieldwork allows a financial diligence provider to gain valuable insight into other aspects of a company’s operations that may be just as important when evaluating a deal. In particular, financial diligence teams may uncover significant issues affecting post-acquisition integration and the investor’s ability to effectively monitor and effect change post-transaction.

In the context of mergers and acquisitions, potential investors get a level of assurance when the investment target is audited.  However, relying solely on the target’s audited financial statements when making an investment decision could be shortsighted.

Many companies provide their financial statements, along with a CPA’s report, to lenders, investors, suppliers and customers. Informed readers of the report will gain varied levels of comfort based on the type of financial statement provided.