CPA Practice Advisor

SEP 2018

Today's Technology for Tomorrow's Firm.

Issue link: https://cpapracticeadvisor.epubxp.com/i/1024106

Contents of this Issue

Navigation

Page 11 of 33

12 SEPTEMBER 2018 ■ www.CPAPracticeAdvisor.com BUILDING YOUR NICHE PRACTICE Each month we explore the advantages and intricacies of developing and growing a niche practice. This month we're examining what it takes to serve the niche of the commercial and professional fishing industry. Top Tax Tips for those in the Commercial Fishing Industry By Mike D'Avolio, CPA, J.D Tax professionals can develop their skills and present themselves to clients and prospects as generalists, specialists in certain industries or a blend of the two. It’s never too late to educate yourself and catch up with the tax (and accounting) requirements in certain industries, such as commercial fishing. The following article discusses some general principles and tax tips for clients or prospects in the commercial fishing industry. Self-employed status A fisherman is considered self-employed (and not an employee) and required to pay SE tax if he/she meets the following conditions: ■ Receives a share of the catch or proceeds from the catch ■ The share depends on the amount of the catch ■ Receives a share from a boat with an operating crew of normally fewer than 10 individuals ■ Generally, does not receive money from work other than a share of catch or proceeds Consequently, there are no withholdings from your crew share for federal and state taxes. It is your responsibility to file tax returns and pay the taxes owed. Under the Tax Cuts and Jobs Act, beginning in 2018 there is a new 20% qualified business income deduction available to small business owners and self-employed folks. Gross income Gross income from fishing includes amounts received from catching, taking, harvesting, cultivating, or farming fish, shellfish, crustacean, sponges, seaweeds, or other aquatic forms of animal or vegetable life. A crewmember or sternman may be given a share of the catch to sell and could receive a Form 1099-MISC from the boat owner and another one from the buyer of the catch for cash (and for different amounts). Consider doing one or both of the following to prevent or respond to inquiries from the IRS: 1) have the boat captain sell the entire catch and give you your share, and 2) receive a check as payment from the buyer of the catch (instead of cash). Deductible expenses Many expenses incurred while fishing are deductible, reducing your taxable income and the taxes owed. Deductible expenses include: ■ Gear and supplies, including rain gear, gloves and boots ■ Licenses ■ Business telephone ■ Airfare and travel expense to and from port ■ Out of port lodging and meals ■ Boat expenses such as galley provisions, fuel and unloading fees A tax credit is allowed for the fuel used by vessels used in commercial fishing. Expenses while away from home Fishermen typically incur large expenses for subsistence while away from home. Cast a Wide Net When Angling for Aquaculture Clients By Becky Livingston If your firm is focusing on the fishing industry, accessing those potential clients requires a diversified marketing tackle box. According to the 2017 Labor Force Statistics, nearly 25 percent of the employees in this industry are women, which could be a niche for your firm that suggests a different approach to marketing than you would use for their male counterparts. From small fishing companies to large fisheries, it’s more about the industry pain points than the actual function of fishermen and women that will help them get hooked on your services. Knowing that fishing is a risky business allows you to create a risk-based service package that addresses, for example, their insurance needs for themselves, family members, and owners. Additionally, offering advice on crop diversification, income risk-coping mechanisms, and/or financial and estate planning could also be part of that package. You could also offer more traditional, outsourced services, such as payroll, financial record keeping, tax planning, tax preparation, and more. But, how do you get them to notice your firm? Begin by defining your target audience. What size fishery are you considering? Where are your clients located? What does a typical business in the segment look like? What industry and technical terms are they using? When are their income peaks and valleys? What are their specific pain points? The more you know about them, the better you’ll be at speaking their language and securing the line. RESOURCES FOR THE FISHING INDUSTRY ACCOUNTANT • Excise Tax Benefits for Sport Fishing: https://bit.ly/2C6HWAP • Depreciation and Amortization for the Fishing Industry: https://bit.ly/2LziaEp • Tax Advice for Anglers: https://bit.ly/2Pe3w81 • Accounting for AquaCulture Financial Reporting: https://bit.ly/2wkwPPl • Treat Fishing as a Business - Lessons from a CPA: https://bit.ly/2MZw6MM

Articles in this issue

Links on this page

Archives of this issue

view archives of CPA Practice Advisor - SEP 2018