Can recently enhanced Sec. 179 expensing reduce your 2012 taxes?
- Posted by DiGiovine Hnilo Jordan + Johnson Ltd.
- COMMENTS
Section 179 expensing allows businesses a 100% deduction for the cost of qualifying asset purchases. Its 2012 benefits were recently enhanced by the American Taxpayer Relief Act of 2012 (ATRA).
Sec. 179 expensing is subject to an annual limit, which is phased out if purchases exceed a designated threshold. So if total purchases are large enough, a business might not be eligible for any Sec. 179 expensing.
Before ATRA, the expensing limit for 2012 was $139,000, with a $560,000 phaseout threshold. The act increases these amounts to $500,000 and $2 million, respectively (the same amounts that applied in 2010 and 2011).
These increases mean not only that many smaller businesses can enjoy a larger tax benefit, but also that some larger businesses that previously wouldn’t have been eligible because their asset purchases were too high may now qualify.
The limits had been scheduled to drop to $25,000 and $200,000, respectively, in 2013, but ATRA also extends the higher amounts through 2013.
Many rules apply, so please contact us at 630-420-1360 to learn if you qualify on your 2012 return — or discuss whether you should plan purchases this year to benefit from the break on your 2013 return.
Small Business & Fraud
- Posted by Brianne Bradley, CPA, CFE and Kevin Mulligan, CPA, CFE at DiGiovine Hnilo Jordan + Johnson Ltd.
- COMMENTS
The Association of Certified Fraud Examiners' 2010 Report stated that small businesses (less than 100 employees) suffered roughly 31% of all occupational frauds, the highest rate of any business category. The median cost of each fraud was $155,000. These losses can be crippling to a small business.
One reason that small businesses are good targets for occupational fraud is that they tend to have far fewer anti-fraud controls than larger organizations. There are two key factors that contribute to fraud in small businesses. First, their small staffs often lack basic accounting controls. Second, there tends to be a greater degree of trust among co-workers in small businesses.
The two main types of fraud affecting small businesses are vendor billing and check tampering. Below are some basic prevention techniques that can help small businesses prevent fraud.
Prevent Vendor Billing Fraud
There are many types of billing schemes, including cash-generating schemes, invoicing via a fraudulent shell company, and personal purchases using company funds. As with most frauds, applying strategic prevention will deter many fraudsters before they get started. Here are some common prevention tactics:
- Enforce authorization procedures of purchase orders, payments, and invoices.
- Segregate duties between authorizing, receiving, shipping, purchasing, and accounting.
- Review the accounts payable vendor listing to identify fictitious vendors.
- Analyze vendor payments on a timely basis for abnormal trends.
- Review receiving and shipping reports for completeness and accuracy.
- Review credit card statements frequently for irregularities.
Prevent Check Tampering Fraud
Check tampering relies on forgery and access to a company's proprietary documents. It can come in a variety of different forms, including forged endorsement, altered payee, and authorized check maker schemes. Common prevention techniques include:
- Check cutting and preparation must not be completed by the check signer.
- Bank reconciliations must not be made by the signatories on the account, and they should be reviewed by more than one person.
- Mail checks immediately after signing.
- Store check stock in a secure location.
- Eliminate the use of paper checks when possible.
- Compare payees listed on the cancelled checks with the payees listed in the cash disbursements journal.
- Rotate employee responsibilities.
Some other common techniques to help in fraud prevention are:
- Maintaining strong internal controls
- Conducting surprise audits
- Establishing a fraud hotline
- Creating a fraud policy
- Enforcing mandatory vacations
Unfortunately for small businesses, most frauds are uncovered either through a tip or by accident. Small businesses, therefore, should be focused on preventing fraud rather than detecting fraud. These techniques, along with a strong "tone at the top," can help to prevent fraud in small businesses.
How can DHJJ help you prevent fraud?
DHJJ’s forensic accountants can work with you to identify potential problems and implement proactive fraud prevention approaches that deter fraud and greatly reduce your risk. Many of the measures we recommend are simple but very effective and can save you significant time, money and anguish in the future.
If you have further questions about fraud and preventative measures please call Brianne Bradley or Kevin Mulligan at 630-420-1360 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. or This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
