BRENT ARDIT, CPA
Groundwater Week presenter
By Jennifer Strawn
Everyone heard about changes to the tax codes that took place this year, but reading—and more importantly—understanding how these changes can impact you as an individual or business owner can get difficult very quickly.
New tax rates, what can be deducted, and figuring out if your business is a pass-through entity are just a few things that can confuse the best-intentioned business operator. With that in mind, Water Well Journal caught up this month with Brent Ardit, a CPA and senior manager at Rea & Associates Inc. in Dublin, Ohio, to discuss the new tax codes and how they impact groundwater industry businesses.
He works primarily with nonprofit organizations, but has several for-profit clients in construction, healthcare, and manufacturing. He will also be giving a presentation at Groundwater Week 2018 titled “Navigating the 2018 Tax Laws to Reduce Uncertainty and Improve Profitability.” It’s a must-attend for business owners who want to be prepared regarding how tax changes could impact their firm.
Water Well Journal: Your Groundwater Week workshop focuses on all of the changes in the tax code taking effect this year. Tell us a little bit about what you will be discussing with attendees.
Brent Ardit: I will focus on both the individual and corporate tax implications of the Tax Cut and Jobs Act (TCJA) and the pros and cons of the tax reform. I will also be covering some state and local tax issues that could potentially affect business owners.
WWJ: What do you think is the single biggest change for business owners regarding taxes?
Brent: Tax reform changes were significant and wide ranging, and because of that, business owners will see the effects both at the business level and individual level. These include a decrease in the corporate tax rate and changes related to businesses that are taxed as pass-through entities. These are a couple of the big changes.
Because the corporate tax rate is lower than individual rates, choice of entity discussions will be important to have. This choice is very much case by case on whether it makes sense for your business.
WWJ: Are there some changes in the tax code that will roll out in the following years or changes now that expire in coming years? If so, how significant are these changes?
Brent: Even though tax reform has been passed, there is still a lot of uncertainty. When there is uncertainty this can cause unintended consequences related to tax reform.
Several changes to the tax code are only considered temporary. This includes the estate tax exemption, reduction in individual tax rates, and pass-through business deduction. Others, including the corporate tax rate decreases, elimination of deductions for entertainment expenses and domestic production activity, are permanent.
WWJ: Are there some changes you think negatively impact business owners? If so, which ones and can these impacts be lessened or avoided?
Brent: I think each business or individual can be affected very differently depending on their situation. Talking with a trusted advisor can go a long way to lessening or avoiding any negative impacts any changes may have.
With that said, the elimination of the deduction for entertainment expenses will affect many business owners. A significant number of businesses rely on entertaining clients, customers, vendors, etc. It will have an impact on how much entertaining they choose to do going forward because they will not have the ability to deduct those expenses.
WWJ: Do you have any tips for changes to bookkeeping or accounting practices that business owners should make to help them navigate the tax changes?
Brent: While I don’t think there is anything in the tax code that would require specific changes to bookkeeping or accounting
practices, I always encourage business owners to maintain detailed accounting records in a software that suits their businesses operations. That way, when working with their accountant or CPA, they are prepared and can quickly gather information to assess how a certain business decision or transaction could affect their tax position.
One of the positives that came out of tax law changes was the loosening of restrictions for using cash method vs. accrual. In general, the cash method allows business owners to better plan for the timing of their tax liability.
WWJ: What do you see as the critical issue facing business owners in the groundwater industry today?
Brent: It’s not specific to the groundwater industry, but attracting and retaining quality employees is a critical issue facing all business owners today.
WWJ: Do you see a different issue facing business owners on the horizon?
Brent: I think succession planning is another issue facing business owners. In my experience, business owners are typically not ready for it until they are ready to exit out the door.
WWJ: What is the most important thing you want those attending your Groundwater Week workshop to take back to their businesses?
Brent: I simply want those attending to be well informed on the current tax environment, which will allow them to run their businesses more efficiently and effectively.
With that said, I always warn folks not to make certain business decisions solely on how it will affect a tax return. Business owners need to make decisions based on what’s best for the longevity of their business and not what may or may not save them on a current tax return.
Jennifer Strawn was the associate editor of Water Well Journal from 2004 to 2007. She is currently in the internal communications department at Nationwide in Columbus, Ohio. She can be reached at firstname.lastname@example.org.