June, 2016 | RKL LLP
Posted on: June 28th, 2016

2 Ways to Boost Lean Results

Two Ways to Boost Lean ResultsOperational excellence. Toyota Production System. Six Sigma. All of these are different names for the same methodology: Lean process improvement. Widely adopted by companies across many industries, Lean methods have helped businesses improve financial and operational performance.

Maintaining Lean standards over time, however, can be a challenge. Often times Lean efforts backslide, stall or consume resources without generating the desired results or return on investment. If your company finds itself in this situation with its Lean process, here are two ways to reignite Lean momentum and reroute toward profitability.

1. Readjust Key Performance Measures

In any business, the only constant is change, so it is important to make sure your operational Key Performance Measures (KPM) are regularly reviewed and updated to adapt to changes. Readjusting KPM helps to ensure your team is managing with a relevant set of metrics to accurately reflect recent changes in important areas like customer expectations, competition, product or service offerings and company strategy. Updated KPM will also shed light on new gaps in performance that should be targeted for improvement.

You should consider annually revisiting KPM to ensure top-line metrics are aligned throughout the business, from front office to shop floor. Consistent KPM review and fine-tuning is key to ensuring Lean has the largest impact on financial and operating performance and helps demonstrate Lean’s value to your business.

2. Tackle that High Profile Improvement

Another way to inject new energy into your Lean efforts is to take a step back and look at the big picture. Every organization has at least one problem or opportunity that everyone (even customers and suppliers) knows about but has never addressed. Find one that impacts the entire value stream or supply chain and expand the scope of your Lean efforts to address it. Think about your order to cash process or whether your lead time provides a competitive advantage. What are your results for on time deliveries? What would happen if you could increase capacity by a third without capital investment? Focusing your team around solving a single, large problem or taking advantage of a significant opportunity brings attention, resets focus and creates a rallying point for the company.

Effective execution of Lean has many benefits, including higher EBITDA, improved cash, shorter lead times, reduced operating costs and better delivery performance. These benefits are too great to sacrifice by letting your Lean efforts flounder.

If your company isn’t getting the expected results from Lean, try the above tactics to reignite momentum and enthusiasm. RKL’s Operations Consulting team is here to help – contact me at rpozesky@rklcpa.com or 717.394.5666.

Robert E. Pozesky, RKL Operational Consulting Contributed by Robert E. Pozesky, manager in RKL’s Business Consulting Services Group. Bob specializes in operational consulting, with extensive experience working with clients to execute Six Sigma, lean and organizational development strategies to support growth and performance improvement.

 

 

 

Don’t miss the latest RKL business analysis and insights. Sign up for the monthly Working Capital e-news. 

 

Working Capital blog disclaimer

 

Posted on: June 21st, 2016

Pennsylvania Steps Up Scrutiny of Sales and Use Tax

PA steps up sales and use tax scrutinyA new effort is underway to increase review and compliance with Pennsylvania sales and use tax, according to a recent announcement by the state Department of Revenue (DOR). For the first time, audits of sales and use tax returns will be conducted remotely under a new desk review pilot program.

DOR launched the effort, which will be housed within the department’s Pass-Through Business Office, to uncover sales and use tax under reporters, non-filers and unregistered taxpayers in the Commonwealth. This new practice will “review business tax fillings to explore instances where sales tax is due on taxable purchases…but may not have been paid,” according to DOR. This often occurs when businesses purchase goods and equipment online, from a catalog or in another state.

How remote sales and use tax desk reviews will work

A remote sales and use tax desk review may be conducted independently or in conjunction with a personal income tax review. These reviews are not required to be performed with a field audit, but DOR reserves the right to open such an inquiry if it believes there is a significant under reporting of taxes.

If sales or use noncompliance is uncovered during the desk review, liabilities will be imposed. Furthermore, if taxpayers fail to respond to information requests or other correspondence related to a desk review, it is highly likely that DOR will open a field audit and issue jeopardy assessments.

Prepare for extra sales and use tax scrutiny

In anticipation of this new desk review practice, businesses engaged in the sale of taxable goods or services in Pennsylvania should review their sales and use tax obligations and liabilities. Sales and use tax compliance can be challenging, due to the constantly shifting landscape of taxes across various jurisdictions, but conducting a self-review (also known as a reverse audit) of a company’s administration, compliance and reporting is a proactive way to assess tax standing and identify needed action. In addition to tax exposure, a self-review is also a chance to identify overpayment and refund opportunities.

RKL’s team of state and local tax experts can help companies conduct a self-review or reverse sales and use tax audit to avoid the burdens and challenges presented by desk reviews and field audits. Contact me today with questions or for more information at jskrinak@RKLcpa.com or 717.409.8855.

Jason C. Skrinak, CPAContributed by Jason C. Skrinak, CPA, State and Local Taxes (SALT) Practice Leader for RKL’s Tax Services Group. Highly regarded throughout the region for his deep knowledge and expertise in SALT consulting, Jason has significant experience representing taxpayers before Pennsylvania’s Board of Appeals and Board of Finance and Revenue.

 

 

Working Capital blog disclaimer

Posted on: June 14th, 2016

Annual PCORI Fee Rises for Self-Insured Health Plan Sponsors

Annual PCORI fee deadlineOver the past several years, RKL has reminded businesses that the deadline for the annual PCORI fee is July 31. In addition to alerting businesses to this annual due date, this year we also highlight the new fee amount for 2015 calendar year plans.

PCORI fee defined

Named after the Patient-Centered Outcomes Research Institute it supports, the PCORI fee is imposed on businesses with self-insured health and welfare plans and is used to fund comparative clinical effectiveness research. Companies that meet the criteria must submit the PCORI fee to the IRS by July 31 each year, via Form 720.

The first PCORI fees were applied to plan years ending on or after October 1, 2012, and will continue to be applied annually through plan years ending on October 1, 2019. In other words, for calendar year plans, the fee is effective for 2012 through 2018.

Who is charged the PCORI fee, and who is not?

Plan sponsors of applicable self-insured health and welfare plans are charged the PCORI fee, including plans that offer a health reimbursement arrangement (HRA) and possibly flexible spending account (FSA) options. To learn more, check out our detailed breakdown of situations where the PCORI fee does and does not apply.  

Why did the PCORI fee amount go up from last year?

Initially set at a flat $1 or $2 fee, the PCORI fee starting with plan year 2014 has risen based on increases in the annual projected per capita amount of National Health Expenditures, set by the U.S. Department of Health and Human Services.

For this year’s deadline, the PCORI fee is set at $2.08 or $2.17 per life covered, depending on the plan year end date:

  • Plans that ended on a date between January 1 and September 30, 2015, must submit to the IRS payment equaling the average number of lives covered under the plan multiplied by $2.08 no later than July 31, 2016.
  • Plans that ended on a date between October 1, 2015 and December 31, 2015, must submit to the IRS payment equaling the average number of lives covered under the plan multiplied by $2.17 no later than July 31, 2016.

It is important to note that there is no extension of the July 31 filing deadline.  

How do I calculate my company’s PCORI liability?

According to the IRS, there are three ways to calculate the average number of lives covered: the actual count method, the snapshot method and the Form 5500 method. Your RKL advisor can help identify the best method for your company and ensure proper calculation.

More information or assistance with PCORI

Unsure about your business’ PCORI requirement? Need assistance calculating the fee? Contact your RKL tax advisor or one of our local offices – we are ready to help you determine and ensure compliance.

Ethel A.M. Nawrocki, CPAContributed by Ethel A.M. Nawrocki, CPA, Principal in RKL’s Tax Services Group. Ethel has 25 years’ experience providing tax, accounting and consulting services to the manufacturing, wholesale, distribution, construction and real estate rental industries.

 

 

Working Capital blog disclaimer

Posted on: June 9th, 2016

RKL Announces New Hire in Lancaster Office

Andrew D. Kehl, CPA, Manager in RKL's Audit Services GroupPRESS RELEASE

LANCASTER, PA (June 9, 2016) – Reinsel Kuntz Lesher LLP (RKL), Certified Public Accountants and Consultants, today announced that Andrew D. Kehl, CPA, has joined the firm’s Lancaster Office as a Manager in its Audit Services Group.

Kehl brings more than five years of public accounting experience and almost three years in private industry to his role at RKL. He has accounting and auditing experience serving clients in a variety of industries including nonprofit, healthcare and government.

Prior to joining RKL, Kehl was the Chief Financial Officer of a nonprofit organization based in York County. Kehl also served as an Audit Manager at a regional accounting firm and a public accountant at an international accounting firm.

Kehl holds a B.S. in Accounting and a B.S. in Finance (with a concentration in Financial Planning) from Salisbury University in Maryland. He is currently pursuing an MBA in Accounting from The University of Scranton. Kehl and his wife reside in East Manchester Township. In his free time, he enjoys playing golf and spending time with his family.

###

Posted on: June 7th, 2016

How Long Should I Hold Onto Tax Records?

Tax Record retention guideYou made it through tax filing season, and now you have a nagging desire to declutter and streamline your tax-related files. Before you fire up the shredder, however, it’s important to understand what documents you should keep and what is OK to toss. Below is a quick overview of the necessary retention periods for tax-related documents, but as always, your RKL tax advisor can answer questions about specific situations or documents.

Tax Documents to Keep Indefinitely

  • Tax returns: It’s a good idea to hold onto your tax returns forever. Old returns can be used to file amended tax returns or to help prepare future returns. They can also be beneficial to your heirs. This is not limited to the federal 1040 – it is also a good idea to permanently retain state and local income tax returns as well as gift, estate, inheritance, and personal property tax returns. There is no legal requirement for the format in which records are retained, so you can digitize them to save space.
  • Some supporting tax correspondence: Keep a permanent record of certain income tax documentation (beyond the 1040 itself) that can be used for future filing. Examples are items such as K-1 forms or other purchase documents that would be used to establish tax basis for a future sale. Included in this category are records of the initial cost of land, buildings, equipment, and other property, including improvement and addition costs. Be sure to keep all correspondence with state or federal revenue departments, or any examination reports conducted by revenue agents.

Tax Documents to Keep for Six or Seven Years

  • Financial records used in a tax return: The IRS can generally audit taxpayers up to three years after an on-time filing, but in some cases and for certain items, they have six years after the filing to get additional tax. Conversely, taxpayers can also recover overpayments of tax in some instances during this same time period. So it’s important that you keep records to support items shown on your income tax returns until this statute of limitations expires. Some of these records may also be helpful to support deductions taken in future years. Examples of supporting records include:
    • W-2s
    • Bank statements
    • Mutual fund or brokerage statements
    • Mortgage interest statements
    • Receipts for medical expenses or other taxes paid
    • Business bills, accounting records and subsidiary ledgers

Even when your records are no longer needed for income tax purposes, you should not discard them until you can be sure they are not needed for other purposes, such as insurance claims or loan applications. Check out our guide on record retention requirements for tips on a wider array of financial documents beyond tax-related matters.

Just as your business or personal financial situation is unique, so is the need for differing timeframes of tax record retention. RKL’s tax professionals can answer your specific questions about tax record retention. Contact your advisor or one of our local offices for assistance.

Robert Gratalo, CPA, York PAContributed by Robert M. Gratalo, CPA, MST, partner in RKL’s Tax Services Group. Rob specializes in federal and state taxation of privately held businesses in the construction, manufacturing and distribution, real estate development, architecture and engineering and service industries.

 

 

Working Capital blog disclaimer

css.php