September 2011 Newsletter articles



Congress Approves Debt Ceiling Bill, What's Next?


On Aug. 2, 2011, President Obama signed the Budget Control Act of 2011 (the Act) to increase the debt limit and avoid a potentially catastrophic default. While the Act contained no tax provisions, it created a new bipartisan joint committee responsible for identifying additional deficit reduction measures, which under the new law must be voted on in Congress by the end of the year.


At press time, it is unclear what changes to the Tax Code may be addressed by the joint select committee on deficit reduction.  However, given the relatively short time frame within which the committee has to work, it is likely that they will not be starting from scratch. We believe they will relook at tax proposals from both sides of the aisle raised as part of the debate leading up to passage of the new law including bold, sweeping tax proposals as well as more limited loop-hole-closing recommendations.


The following summarizes some of the tax changes that have been put on the table. Of course, whether the committee uses these proposals as a menu to craft tax legislation, or takes a completely different approach, remains to be seen.


Potential business tax changes:

· Increase the tax rate for capital gains and dividends

∙ Permanently extend the research and experimentation credit

∙ Eliminate the LIFO inventory method

∙ Extend the 2011 payroll tax cut

∙ Abolish the alternative minimum tax

∙ Reduce the corporate tax rate from 35 percent to somewhere between 23 to 29 percent

∙ Reduce or eliminate the Section 199 production activity deduction

∙ Move the corporate tax system from a worldwide system to a territorial system

∙ Cap the income tax exclusion for employer-provided health insurance

∙ Eliminate certain oil and gas tax preferences




6 Key Components of a Basic Business Budget

Many owners of small to midsize businesses don’t create a budget or don’t update the one they have, typically because they’re too busy or simply not focused on sticking to a budget. Yet with the economic recovery slow and every dollar precious, you need to know where your money is going — both now and in the near future.

What’s more, others might be looking for your company to maintain a sound budget. Banks, for instance, are setting up loan covenants with an increased emphasis on budgeting. With that in mind, here are six key components of a basic business budget:

1. A description of your business and its market. You may think you have a sound budget for your company, but it won’t be accurate if it’s for your company three years ago. Compose a brief description of precisely what you’re doing right now, how your market is going (hot? cold?), and what economic factors may be affecting how your money is budgeted.

2. Explanation of how the budget supports the company’s mission, vision, values, goals and objectives. To be included in the budget, items should tie into and support overall company goals. If you can’t effectively demonstrate how an item enables a particular goal, you should question its merit. If you don’t already have a mission statement, compose one to help you with this component.

3. Line-item details for allocating funds. Typical examples include staffing, real estate, equipment and material needs. Although it can be tedious to maintain a detailed budget for all company expenditures, it’s good cash flow management. Your budget can facilitate expense tracking and help guide spending decisions to align with your business goals.

4. Expectations for measuring performance against the budget. For analysis purposes, a budget is useful only if you update it regularly so it accurately reflects actual spending. For instance, you may have underbudgeted or overbudgeted on some items and, thus, spent more or less than you anticipated.

5. Supporting appendices. These may include a historical budget and results analysis. Also consider attaching summary documents for each department, tables and graphs depicting market and cost trends, organizational charts, and a glossary of terms.

6. An executive summary. This can be a good way to focus all of the information in your budget and provide you with some practical "takeaway.” More important, an executive summary can make your budget more digestible to lenders and outside investors.



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