8 North Bay business financial experts chart paths through coronavirus uncertainty

NORTH BAY BUSINESS JOURNAL

November 13, 2020

When the world was turned upside down with the coronavirus pandemic in the spring, followed by shutdowns and shelter-in-place orders, many businesses were thrown for a loop.

These North Bay accounting firm executives answered questions posed by the Business Journal about this changing financial world:

Eric Briese, Eckhoff and Company
Jon Dal Poggetto, Dal Poggetto & Company
Robert Murphy, Frank Rimmerman + Co.
Carli Oritz, Linkenheimer CPAs
Alissia Pope, BPM
Meredith Rennie, Mengali Accountancy
Garrett Tucker, Pisenti & Brinker
Jonathan Weintraub, Montgomery Taylor Wealth Management

Eric Briese, CPA, CGMA

Partner

Eckhoff and Company, CPAs and Advisors (EAC)

145 N. Redwood Drive, Suite C, San Rafael 94903

415-499-9400

www.eckhoff.com

Eric Briese is a partner at EAC. Focused on overseeing the firm’s business tax, estate/trust tax, and business advisory services departments, Eric brings nearly 40 years of experience in both public accounting and business management/accounting to the EAC team.

How has recent legislation at the state level changed how you advise clients (in reference to AB 91 and AB 147) with the disruption of the economy since March? What are the two or three things that have changed most about your work?

With the limited conformity of state tax laws to recently enacted changes in the federal tax laws, we have to be more diligent in advising our clients as to the tax implications of their actions and how those implications may be very different for state tax purposes than for federal tax purposes.

We also need to address more carefully whether a business may be subject to tax in California, even if it has no physical presence in the state. With all of the online selling that is occurring during this pandemic, more sellers may not realize their potential California tax liability.

Working remotely is the “new normal.” How is that effecting your dealings with clients?

Since most of our work is done remotely and we have some clients that are not located in California, this recent phenomenon has only had a positive impact on our ability to connect with clients, since we can do so in even more ways than before.

Video conferencing has become a prime means of communicating with our clients, and our cloud-based systems are a vital way of exchanging information with them.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

Our firm has been in business for over 65 years. We have seen the economy rise and fall through a couple of recessions, so we understand how to adapt to everything from changes in the tax codes, recession-driven concerns, positive and negative effects on retirements, and other issues that arise out of uncertain times.

Although the pandemic itself is an unknown, the effects on personal wealth and markets appear to be similar to other events, and our strategies have remained relatively constant.

What is a piece of advice do you give to all of your clients?

The best piece of advice I can pass on right now is first and foremost, listen to their trusted advisers, whether they be in the fields of finance, tax, law, insurance or health care. Our clients have been tested in new ways, but we have discovered that the real value we bring to the table is helping our clients navigate the unknown.

What is your strategy for finding new clients?

Eckhoff was built on and continues to grow through referrals. Although many companies use data mining and pursue active referral solicitation, we have found the best way to get a referral is to deliver what you promise. We get new referrals every day for that reason.

That said, we have recently identified that many of our clients want more services. We are now moving to an enterprise service model that will better serve our client’s needs. We will actively engage our client base to let them know of these new services.

Do you focus more on business development or retention?

Business. We believe business development is best achieved through working with our clients proactively.

Jon P. Dal Poggetto

Managing Partner

Dal Poggetto & Company LLP

149 Stony Circle, First Floor, Santa Rosa 95401

707-545-3311

www.dalpoggetto.com

Jon Dal Poggetto is currently managing partner of the Santa Rosa-based CPA firm Dal Poggetto & Company LLP, a position he has held since the firm’s inception on Nov. 1, 1992.

Dal Poggetto graduated from University of California, Berkeley with a Bachelor of Science degree in business administration-accounting emphasis in June, 1975. He has been a partner with the CPA firms of Eisenberg & Company LLP, Touche Ross & Co. and Deloitte & Touche before founding Dal Poggetto & Company LLP in 1992.

AB 91 and AB147 were enacted last year, and have not created any issues for us in 2020. The changes in 2020 related to the pandemic have included remote work for all employees and remote auditing of client financial statements.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

Much of my interface with clients now occurs primarily through telephone calls and email, with an occasional Zoom meeting or socially distanced face to face meeting.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

Our remote work capabilities have been greatly expanded and will continue to be developed.

What is the biggest tax advantage most company clients can take advantage of right now?

Bonus depreciation and Section 179 deductions.

What is your strategy for finding new clients?

Referrals from existing clients and other professionals are the most effective ways that new clients are obtained.

Do you focus more on business development or retention?

Our focus is client service, which usually means happy clients that refer work to us and want to stay with us.

Robert Murphy

Frank, Rimerman + Co. LLP

899 Adams St., Suite E, St. Helena, CA 94574

707-963-9222

www.frankrimerman.com

AB 91 – Now that California has selectively conformed to certain provisions of the 2017 federal tax reform known as the Tax Cuts Jobs Act (TCJA), it is important to review taxpayer planning opportunities for both individual and businesses. From the removal of the technical terminations for partnerships, to the new limited 1031 exchange rules for California, it is vital to ensure prior planning will not be impacted and to review opportunities presented under the new law.

Two areas we are paying close attention to include the expansion of businesses’ ability to report taxable income under the cash method of accounting, and the more restrictive California excess business loss limitations.

AB 147 – Many states have been moving towards a position of taxing business activity on an economic nexus standard rather than a physical presence standard.

In this new environment, businesses need to continuously review sales by jurisdiction to ensure they are in compliance with state law where sales cross economic nexus thresholds.

The rules are complex and vary by state, meaning there is no “one size fits all” test to apply. It is now more important than ever to conduct an annual review of business activity and sales sourcing.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

We continue to work closely with clients while remote and find that our clients have themselves quickly adapted to these new ways of working.

Interestingly, we find some clients appreciate the efficiency of working together without the expectations of travel and with the immediacy of electronic communications.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

While working remote is not new for our firm, the sudden shift to an almost entirely remote workforce was an adjustment for almost every business.

However, with prior preparation including the adoption of cloud-based technologies and virtual collaboration tools already in place, we quickly adjusted to the new norm. We have also witnessed our team’s compassion for our clients and their fellow teammates throughout these difficult times.

With over 70 years in the Bay Area, we have seen tumultuous times before. We are thankful that, due to the fundamental health of our business, we can focus on assisting our clients to survive the pandemic and look forward to the growing opportunities of the future.

2020 was a reminder that the future is always filled with uncertainty and risk. The decade-plus of steady economic growth prior to the pandemic lulled us all into thinking that we could accurately predict the future of our businesses, the economy and the environment in which we operate.

If anything, we will all likely take away a reminder that there are few replacements for good planning and an ability to react to unexpected circumstances. Working closely with your CPA is part of both.

What is a piece of advice do you give to all of your clients?

Especially during these times of uncertainty, I encourage my clients to proactively reach out and talk about their future plans and expectations.

Obviously, we can talk about deals or transactions, so I can discuss and review before any terms are set, but also contingency plans and managing future risk. Being proactive and thoughtful is always preferred to reactive, and planning up front is almost always more efficient.

What is the biggest tax advantage most company clients can take advantage of right now?

Two of the biggest tax advantages for clients to consider are bonus depreciation and 179 expensing. It is important to review both annually, especially in the light of the new federal rules.

In addition, the application of the cash method of accounting to a larger group of businesses allows for a simplification of tax reporting and an acceleration of deductions. Reviewing for both federal and California is important and reviewing with the new excess business loss limitations for planning of losses is imperative.

Another tax advantage that I find that many businesses are not aware of is the agricultural and manufacturing sales tax exemptions for equipment purchases. This exemption applies to many industries and is very simple to implement in order to lower sales tax paid on purchases.

What is your strategy for finding new clients?

These are the times when the depth of client relationships really make a difference. Excellent service continues to fuel the growth of our North Bay accounting practice. In addition, our long history in the region and deep local industry relationships generate steady referrals and an appreciation for our unique business environment.

Do you focus more on business development or retention?

Building relationships with my clients will always be more important to me than building new business.

I am fortunate to be able to interact with my clients on a frequent basis to help them and their businesses with tax and operational planning. These relationships allow me to have a deep understanding of their business, providing the ability for me to truly assist them to reach their goals.

Carli Ortiz, CPA

Partner

Linkenheimer CPAs

187 Concourse Blvd. Santa Rosa 95403

707-546-0272

www.linkcpa.com

Carli Ortiz specializes in family-owned businesses, individual taxation, estate and trust taxation and planning, tax credits and incentives, and strategic succession planning.

AB 91 provides partial conformity to the Tax Cuts and Jobs Act that was effective in 2018.

The biggest benefit this provides to our clients is that California will conform to the federal $25 million gross receipts test that allows businesses under this threshold to use the cash method of accounting.

This can provide significant tax savings, especially to wineries and those in a manufacturing industry.

For businesses that will have higher income this year due to PPP loan forgiveness, it could be a great time to consider a switch to the cash method of accounting to reduce overall taxable income.

Since California now conforms to AB 91, the businesses do not need to have multiple sets of accounting records (book, federal, California). Even though businesses’ revenue may be down in 2020 due to COVID-19, their taxable income may be up due to receipt of a PPP loan as the expenses that qualify for forgiveness are not deductible and in turn increase taxable income.

This year we have spent more time than ever assisting our clients with tax planning, and have spent endless hours on phone calls discussing PPP loans.

Regarding AB 147, most of our business clients are located in California, so AB 147 does not have a significant effect on them. This really effects out of state businesses who are selling products to Californians.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

Surprisingly, it has made client interactions much more efficient. In the past, an in person client meeting might take 2-3 hours with driving time, and now we can hop on a Zoom call and eliminate that extra driving time.

It is great to see everyone embrace the technology required for remote working, and I love it when my elderly clients suggest a Zoom call (how many of you can say you’ve Zoom’d with an 80 year old?).

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

I think 2020 in general has taught all of us how adaptable we really are, not just as a company but also as a community.

Over the last decade, our firm has shifted to provide more and more tax consulting and advisory services, versus mainly compliance services.

As there are changes in the economy, our clients’ strategies and planning opportunities just shift. Our focus with our clients is always on strategic planning. So we are used to economic cycles and our planning ideas change from year to year, depending on each client and their industry.

Sometimes the best planning ideas happen when business income is down- could be a good opportunity for an IRA conversion to a Roth, for example.

What is a piece of advice do you give to all of your clients?

Be proactive and keep us in the loop. If you want the best result, you have to keep us apprised of what is going on (thankfully, most of our clients are great at this!).

Planning on the front end, whether it be for a sale, transaction or just a high income year can end up saving you a ton in taxes and significantly increase your cash flow. If you bring us the information after the fact, sometimes there is not much we can do to provide a better result.

What is the biggest tax advantage most company clients can take advantage of right now?

Strategies for each client vary vastly depending on their income levels, industry, and overall goals. We are seeing many of our clients benefit from switching to the cash method of accounting if they are under $25 million in gross receipts, and also many clients who benefiting from the Section 199a deduction which in many cases can be maximized with a bit of planning.

What is your strategy for finding new clients?

We spend a lot of time and effort on maintaining our company culture and I believe that in itself is a big draw for clients. They want to work with advisers whose values are aligned with theirs, and in turn, we end up with new clients that we are able to develop long-term business relationships with.

Do you focus more on business development or retention?

They are both important, but I believe that focusing on retention by keeping clients happy and being proactive in order to get them the best possible result, will in turn lead to business development. Existing clients end up being one of our biggest referral sources.

Alissia Pope

Tax Director

BPM LLP

110 Stony Point Road, Suite 210 Santa Rosa 95401

707-524-6573

bpmcpa.com

Alissia Pope is a tax director at BPM. With more than 15 years of experience, her primary focus is on providing comprehensive financial and business counsel to privately held companies in the areas of tax, accounting and business management. She specializes in the consulting, planning and preparation of individual and business entity tax returns, and provides guidance about structuring new business entities in order to maximize tax benefits.

Working remotely is the “new normal.” How is that affecting your dealing with clients?

The new normal has paved the way for increased strategic communication. Since we are unable to have more face-to-face check-ins and drop-ins with clients, we have increased our digital communication efforts through calls, texts, emails and video conferences. We are making sure our clients stay up-to-date with tax law changes, while having the resources they need from BPM.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

Instead of calling it the “New Normal” at BPM, we are calling it the “New Better.” While 2020 has been a year of changes, we are focusing on the positive ones. We are utilizing new technology to reach clients and prospects more strategically and effectively. We are a profession that is flexible and can switch gears quickly, when needed.

What is a piece of advice do you give to all of your clients?

We are all in this together – have patience and be communicative. It is so important now more than ever, because we cannot meet in person.

What is the biggest tax advantage most company clients can take advantage of right now?

As many of our agribusiness and real estate clients navigate not only the new economy, but also rebuilding lost property and/or crops, we are collaborating with them to explore stimulus opportunities through PPP loans and available grants for businesses within fire zones.

What is your strategy for finding new clients?

Our reputation for providing quality tax, audit and advisory services lends itself to word-of-mouth referrals. However, we are also making a point to stay connected to our business communities – even in a remote work world – through virtual events with bankers, attorneys other contacts.

Do you focus more on business development or retention?

Our BPM1 service model ensures our team does both. We retain clients by introducing them to new specialty service and advisory groups within the firm, including our Economic Recovery & Emergence Task Force for PPP and stimulus opportunities and M&A and Valuations teams for transitioning businesses.

Meredith Rennie, CPA, CGMA

Director of Real Estate Accounting

Mengali Accountancy Inc.

205 Foss Creek Circle, Healdsburg 95448

707-431-0600

www.mengali.com

Rennie has been practicing in public accounting since 1997. Before joining Mengali Accountancy, her breadth of experience included working with other leading local and regional firms in Sonoma County having earned her way to partner during her tenure. She currently specializes in real estate accounting assisting Mengali clients with over a billion in managed assets across the United States, with concentration in multi-family joint venture partnership structures.

Meredith is a member of AICPA. She hold a Bachelor of Science degree in business administration with concentration in accounting from Sonoma State University.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

Interestingly, in a NBBJ article in 2015, I responded to a question about how I thought the profession would change in the next five years.

My thoughts were that freedom of mobility for the broader workforce would change the way teams work together in the accounting profession. The standard work week is shifting further and further away from the standard 8 a.m. to 5 p.m. in a physical office building. Autonomy to work anywhere at any time is becoming the norm. Here we are five years later, and this could not be truer.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

In the near term, the changes in the economy due to the pandemic has left a mark of fear and uncertainty that creates challenge.

Our focus continues to be client service driven which requires investment in our workforce and we continue to seek out qualified team members to meet the needs of ongoing growth of the firm.

I personally feel it is too soon to tell regarding any long-term effects and each business sector will experience different impacts. Additional economic changes should be expected in connection with election results that will require many business owners to evaluate both short-term and long-term strategies.

What is a piece of advice do you give to all of your clients?

For individual clients, top piece of advice is to get proper wills and trusts done and estate plan as appropriate. Regardless of the industry in which our clients operate, this is something all our clients can benefit from. It is not uncommon for our Family Office Team to take on a new client accounting for an estate without a will or trust to guide the process.

There are so many reasons this is important from protecting your interests and tax savings to privacy issues during probate process. The benefits far outweigh the costs.

For our business clients, the top advice is to put in place strong internal controls and best practices. Doing so from the start helps to support ongoing business growth and provides opportunity to improve performance and productivity.

Like our team at Mengali Accountancy, best practices help create a culture of creativity and collaboration. Work smarter, not harder to achieve complete, accurate and timely results.

What is the biggest tax advantage most company clients can take advantage of right now?

In March 2020 the Coronavirus Aid, Relief, and Economic Security Act, aka the CARES Act was signed offering opportunities for many business clients.

Many of these opportunities are regarding payroll in the form of forgivable business loans, retention credits and payroll tax deferment.

For our real estate clients, the changes in the bonus deprecation for qualified improvement property, depreciation catch ups and business interest expense limitations can provide tax savings immediately. As each business model is unique, one must consult their tax adviser to determine which provisions of the CARES Act provide the best result considering the tax savings, cash flow management and operations.

What is your strategy for finding new clients?

Mengali Accountancy and more specifically our firm principal, Renee Mengali, is well known in the real estate marketplace across the country.

This long-established reputation with two decades of experience in real estate transactions of all types and structures including commercial, multifamily housing, ground-up development, redevelopment, tax credit equity, REITs, deed-in-lieu acquisitions, and others nationwide.

Mengali Accountancy is an industry leading accounting firm in this sector and we gain new clients through referrals from our extensive client network across the country.

Do you focus more on business development or retention?

At Mengali Accountancy our team focus is on continued excellence in client service. Our core values are excellence, accuracy, integrity, dependability, collaboration, and respect, while providing the highest level of service to our clients. The entire team’s dedication to the firm’s core values has been an effective strategy for both business development and retention.

Garrett Tucker

Partner

Pisenti & Brinker LLP

3562 Round Barn Circle, Suite 300, Santa Rosa 95404

707-542-3343

www.pbllp.com

Garrett Tucker is a partner in the firm’s tax department with over ten years of experience in assurance and tax services. He started his career with Pisenti & Brinker LLP in 2008. Tucker has experience in inventory costing and associated tax issues, fixed asset and cost segregation studies, as well as international taxation issues.

Tucker is a graduate of California State University, Chico.

The Tax Cuts and Jobs Act in addition to California’s semi conformity AB 91 had changed the tax landscape mainly starting with the 2018 tax year, some provisions helped for 2017, and these coupled with the CARES Act relief for COVID-19 has made this year one of the most challenging tax years I have ever faced.

There were some weeks we were getting updated guidance almost daily. On a positive note, most of these changes are all taxpayer friendly.

Some of the biggest and most beneficial changes for our clients have been the new rules around who is able to use the cash basis of accounting to match the income they are being taxed on with the cash they receive, simplification of inventory costing methods to remove complex calculations that are time consuming and costly, and favorable changes to the net operating loss carryback rules allowing a five year carryback period for people to go back and get cash refunds needed during this trying time.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

It has been a new challenge in an already challenging year, but all have taken it in stride. Many more phone calls and Zoom meetings that are becoming the new normal. Many clients are utilizing Zoom for in person meetings and most continue to use email as a main communication tool.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

As many other companies are facing, we had to shift to a remote workforce almost overnight which brought challenges and some lasting potential benefits.

We were fortunate to have solid and secure IT structure that made it relatively easy for our employees to get set up at home similar to how they would be in the office and began a trail run prior to the shelter in place. I think we will continue to see a shift to a more remote workforce for many companies, which can bring potential multi-state tax issues.

What is a piece of advice do you give to all of your clients?

(written Oct. 29) Pay attention to the election! We have two presidential candidates with differing tax plans. Everyone needs to know what the impacts to them are depending on who is elected and to be ready to make some yearend adjustments if necessary, whether that is to purchase that piece of equipment this year compared to next year, possibly try to accelerate income recognition into 2020 due to higher tax rates for 2021, or making sizable gifts to take advantage of the large gift and estate tax exclusion that may change significantly.

2021 may be a very different tax landscape that we will have to navigate and people need to be prepared for those changes.

What is the biggest tax advantage most company clients can take advantage of right now?

Currently the biggest benefits are around bonus depreciation, the ability to expense 100% of the purchase price of qualified assets in the year they go in service. This is a huge benefit to clients who are needing new vehicle, equipment, or qualified leasehold improvements (among other qualifying property) to expand or enhance their business.

The bonus depreciation can also reduce the business income into a loss position, which can then be carried back under the adjusted net operating loss rules to get a refund of prior years’ taxes.

Additionally the ability to switch to the cash basis of accounting has been a major change for some clients that has been very beneficial, and can generate a loss in the year of change, which can be carried back.

What is your strategy for finding new clients?

Referrals are one of the biggest compliments we can receive from our clients and associates and my preferred way to receive new clients.

Do you focus more on business development or retention?

Retention, we aim to serve our clients the best we possibly can and that means making sure we take care of their needs first before adding more clients. By providing great service to existing clients, new clients tend to come from their referrals.

Jonathan Weintraub, CPA

Operations manager

Montgomery Taylor Wealth Management

2880 Cleveland Ave., Suite 2, Santa Rosa 95403

707-576-8700

www.montgomerytaylorwealth.com

Jonathan Weintraub, CPA, is the operations manager at Montgomery Taylor Wealth Management. The firm is a CPA firm as well as a Registered Investment Advisory firm. Weintraub is involved in complex tax preparation and consulting, as well as overseeing the operations and growth of the firm.

Weintraub graduated from Sonoma State University with a bachelor’s degree in accounting and moved on to pursue his masters in taxation at Golden Gate University.

AB 91, is called the “Loophole Closure and Small Business and Working Families Tax Relief Act of 2019,” and affects both California personal income tax and corporate tax.

The bill selectively conforms to certain federal provisions from the 2017 tax reform known as the Tax Cuts and Jobs Act (TCJA).

However, A.B. 91 does not conform to, or decouple from, several of the more significant federal tax reform provisions impacting business and individual taxpayers. Therefore, we, and our clients, are still confronted by a host of federal-California differences that will complicate California taxpayers’ compliance, planning, and transactions for prior and future tax years.

AB 147, is a new 2019 law creating an economic nexus threshold for remote sellers and marketplace facilitators, requiring sellers that exceed $500,000 of sales in California to collect a sales tax. This threshold only applies to remote sellers that do not have physical presence in California.

There have always been differences between federal and California tax law, making an additional challenge of compliance. Nothing has changed other than us working with our clients remotely, via email, phone and virtual meetings.

Working remotely is the “new normal.” How is that effecting your dealing with clients?

We miss the face-to face meetings with clients. However, we have been able to keep work projects flowing via email and virtual meetings. We look forward to seeing out clients again.

What are the lasting effects of the changes in the economy on your business and/or your company’s strategies?

We are busier now serving our clients and guiding them through the business and investment challenges they are facing. We see an increased dependence on our services in business consulting and retirement planning. We see the increased use of virtual meetings as a good thing, making it easier to meet with clients.

What is a piece of advice do you give to all of your clients?

Our firm is planning oriented, whether our client is a business or individual. So, our advice is always: develop a plan, choose a strategy and follow a process. This is true in business and in managing wealth.

What is the biggest tax advantage most company clients can take advantage of right now?

With so much emphasis on the PPP loans, don’t forget to consider the Employee Retention Credit.

For qualified wages paid after March 12, 2020, and before Jan. 1, 2021, employers are allowed a refundable tax credit equal to 50% of qualified wages, including allocable qualified health plan expenses. The credit is designed to encourage employers to retain their workers when their business operations slow down or are temporarily suspended due to COVID-19.

However, various other COVID-19 provisions provide 100% reimbursement from the government when an employer continues to pay employee wages. Thus, under a situation where the wage qualifies for both 100% reimbursement under a different provision and the 50% Employee Retention Credit, the employer is allowed to elect out of the Employee Retention Credit.

What is your strategy for finding new clients?

In past years we did lots of advertising. In more recent years, clients find us via referral or the internet. They appreciate that we have the expertise to reduce their tax liabilities while increasing their net worth.

Do you focus more on business development or retention?

Since our firm is in growth mode, we actively concentrate on both development and retention. Business development happens organically and through acquisitions. Retention is the result of our emphasis on client satisfaction and this is a result of our firm’s core values: to be considerate, loyal, having high standards, being ambitious an having a strong work ethic.