California is providing interim guidance to business owners looking to make small business accounting elections, Law 360 reported Thursday (Aug. 1).
The California Franchise Tax Board announced its interim guidance on Wednesday via an email signed by the board’s spokesperson, Chris Smith, reports said. The guidance aims to support small businesses in their efforts to comply with California law, which has conformed to new rules under federal tax regulatory overhauls via the Tax Cuts and Jobs Act.
Formal procedures have not yet been implemented, but according to Smith, small business owners will have to provide certain information to the board to make small business accounting elections. That information includes a statement of intent to make a small business accounting election, and which elections they plan to make; that information should be submitted along with a business’s original or amended tax return for the appropriate tax year.
While these guidelines are not yet on the board’s website, Smith’s email said that they soon would be, according to reports.
Small business accounting requirements are in flux in other ways, too.
The Financial Accounting Standards Board has recently adopted widespread changes for corporates and small businesses in how they account for leases, hedging and expected credit losses. In June reports emerged that the FASB was considering offering small businesses more time to implement and comply with those accounting standard changes.
At the time, the FASB also announced that if it did decide to offer small businesses more time, it would need to clarify the definition of a “small public company” to define which businesses would qualify for an extension.
Earlier this year analysis from the Associated Press warned that small businesses and their accountants often lack clarity on how to comply with new tax laws, reporting that the Internal Revenue Service had previously issued guidelines for SMBs to understand their qualifications for a tax deduction — though small business accountants warned that the guidance had not answered all of their questions.