Debt vs. Taxes: Should You Pay Off Your Loan

Mark Fearon | October 9th, 2015
Loan Repayment - Ohio CPA Firm

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Have you ever heard someone say they couldn’t afford to pay off their loan because they would lose the interest deduction on their tax return?

Although it’s true that the taxpayer will be able to deduct their loan interest at tax time, there’s a lot more to consider – read on to learn more about the tax treatment of loans and interest to identify a repayment strategy that works best for you.

Read Also: Don’t Let Tax Incentives Determine How You Donate

It Is Worth It To Be In Debt?

Let’s assume that you are in the 25 percent tax bracket, which means that for every dollar you pay the bank in interest, the government will give you 25 cents back in tax savings. BUT – you have to remember that you are still out of pocket 75 cents of every dollar you pay the bank in interest. From an overall cash flow standpoint, that doesn’t really sound like a winning strategy to me.

Even though it would be nice to have a tax break to look forward to in the spring, you will ultimately end up paying more over the duration of your repayment period if you choose not to pay your loan off. That being said, if you have the funds available to pay off the principal loan balance you will save yourself the cost of the interest you are being charged by the bank.

Without the tax deduction, you will pay a little more in income taxes but you will be left with more money in your bank account at the end of the day.

Possible Reasons to Hold On To Your Loan

  • Investment Opportunities

Let’s say your loan balance is $50,000. If you have $50,000 of excess funds available to pay off your loan, you may also want to consider what your investment options are if you didn’t pay that loan off. Could you earn a rate of return greater than the interest rate you are paying on your loan? If so, then you may be better off keeping the loan and investing your excess funds.

  • Liquidity

Another consideration is the liquidity. You may have the funds to pay off the loan but you may want to keep a reserve of funds for an emergency or unknown need that may arise. Everyone has their own comfort level when it comes to maintaining an excess supply of cash reserves and your decision may vary whether you are holding on to a home mortgage loan or a business loan. As a business owner, for example, you might find it to be more beneficial to keep the borrowed money readily available to cover any fluctuations pertaining to your company’s equipment or inventory needs. Or you may want to keep a reserve of funds to get through your slow season.

Depending on where you are with your business or personal finances, you’ll want to consider various factors when deciding if you should pay off your mortgage or business loan. If you are only looking at the tax savings, then paying off the loan is likely your best option. However, it may also be important to consider other factors such as alternative investment options and liquidity. If you have questions about paying off your loan, email your Rea advisor.

By Mark Fearon, CPA (New Philadelphia office)

Are you looking for more tips and tax breaks to maintain your financial security? Check out these articles for more tips and advice.

Become A Brank Reconciliation Warrior

Does Your Vacation Home Provide Tax Relief?

The Birth Of The Taxpayer’s Estate

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Stop The Family Drama With A Buy-Sell Agreement

Tim McDaniel | October 8th, 2015
Take control of your future with a buy-sell agreement - Unsuitable on Rea Radio

You don’t know what the future holds, but if you don’t take steps to prepare for the unknown you are leaving your business and your family vulnerable. Click here to listen to How To Ruin Thanksgiving Dinner on Unsuitable on Rea Radio, a new finance and business management podcast.

It seems like when the holiday season comes around everybody does their best to put their best foot forward and to portray the image of “the flawless family.” From the turkey dinner on Thanksgiving, to the Christmas cards featuring happy, loving families – we do all we can just to make sure everything is … perfect.

Listen to the podcast: How To Ruin Thanksgiving Dinner

The holiday season is also notorious for other less-than-perfect qualities, such as family fights, holiday shopping stress and, ultimately, increased depression and anxiety.

Now imagine you are battling the normal holiday stressors while trying to manage a family business. And what if your business is in crisis mode and your life, the future of your family members and the sustainability of your company hangs in the balance?

When you own a business with family or friends you already run the risk of business matters spilling over into your personal affairs. But when you haven’t invested the time and resources needed to plan ahead, you are leaving your business and your family vulnerable. Take control of the future of your business and the general well-being of your family all year long by knowing the true value of your business and investing in a proper buy-sell agreement.

Click here to read the full article.

By Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

Business Valuations - Ohio CPA firmLearn more about the importance of securing a custom business valuation and buy-sell agreement. Listen to the How To Ruin Thanksgiving Dinner” podcast on Unsuitable on Rea Radio at or on iTunes or SoundCloud.

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Why would I want to listen to a podcast from an accounting firm?

Lee Beall | October 7th, 2015
Unsuitable Podcast - Ohio CPA Firm

Mark Van Benschoten (left) talks with Doug Feller, a principal and financial advisor with Investment Partners, talks about wealth enhancement and investment tactics for an upcoming episode of Unsuitable on Rea Radio, a new financial and business advisory podcast from Rea & Associates. Click here to learn more about Unsuitable on Rea Radio.

I know what you’re thinking – listening to a podcast from an accounting firm is probably about as entertaining and insightful as watching paint dry. But Unsuitable on Rea Radio isn’t your typical accounting podcast, and here’s why.

Real, Simple Solutions

Who doesn’t like a good story? What about one that leaves you with greater insight into the financial wellness of your own company? And if you had a better idea of how other successful entrepreneurs manage their wealth, wouldn’t you try to follow their lead?

The professionals at Rea have seen a lot over the last several decades and they are willing to open the curtain just enough to provide you with the information to forge your own success. And on Unsuitable, they do just that.

An Effective Kick In The Pants

Unsuitable offers a little something for everybody and I am confident that this is a show that will not only help provide you with more clarity, but will motivate you to take the next step as a professional and as a business leader.

Look at what has already been discussed in the first four episodes:

And this is just the beginning. Look for episodes highlighting investment strategies, Affordable Care Act compliance and retirement preparedness – just to name a few.

Accountants Like To Laugh Too

This may come as a surprise to many since those in the accounting profession tend to be thought of as dry, stuffy, number-crunching fanatics, but that’s just not true – well, most of the time. The Rea team consists of some pretty humorous, outgoing folks and I think that the diverse sense of humor of our team shines through. Mark Van Benschoten, the host of the show, helps a lot, of course. He does an excellent job addressing each guest and makes them feel comfortable … then the show gets really good.

Just The Right Length

Our firm has 11 offices throughout Ohio, which means I do a lot of driving. When I’m on the road I like to listen to podcasts – and there are a lot of them out there! What I really like about Unsuitable, is that it’s long enough to be really informative and wraps up nicely before it reaches the point where I am wishing it would end. In fact, when it does end I find myself wanting to start the next one. Mark and his guests get right to the point of the show, provide examples and offer hard-hitting advice in a concise, enjoyable format – all while having a great time and avoiding stuffy accounting jargon.

Go to now and start listening or subscribe to Unsuitable on Rea Radio on iTunes or SoundCloud. I also want to encourage you to use #ReaRadio to join the conversation on Twitter and Facebook.

By Lee Beall, CPA (Dublin office)

Click here and start listening to Unsuitable on Rea Radio now!


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What companies can do now to get ready for the 2016 tax season

Tracy Kaufman | October 5th, 2015

It’s time to do your business tax planning and, just like a doctor’s check-up, if you decide to skip it, you may regret it.

You could face a larger tax bill because you weren’t in close enough contact with your advisers when you did a transaction, changed a policy or practice, or amended what you are doing with insurance. You may encounter wide swings in income and tax due from one year to the next if you don’t check in with your advisers.

Smart Business recently interviewed Tracy Kaufman and Joe Popp about tax strategies business can implement now to prepare for the upcoming 2016 tax season. Want to learn more and see what you can start doing now? Check out the interview on Smart Business’s website.

What to read more posts about tax planning strategies? Check these out:

The Truth About Tax Extensions

Is Simplicity Worth The Cost Of Peace Of Mind?

5 Tax Deductions To Ease Your Business’s Tax Burden

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Happy Manufacturing Day 2015

Frank Festi | October 2nd, 2015

Manufacturing Day - Ohio CPA FirmToday, the team at Rea & Associates is celebrating you – our manufacturing leaders who continue to work hard to promote the American values that continue to make our country a great place to live, work and play. We are proud to stand at your side as you educate our citizens about the value of seeking prosperity through a career in the skilled trades; and we are united in the mission to build strong, sustainable communities – both locally and throughout our great nation. The manufacturing industry is undoubtedly the cornerstone of the American economy and we are proud to stand with you as you continue produce and disperse high-quality products, employ countless hard-working men and women, and give your ongoing support to our local and national educational systems, nonprofit organizations and business communities. You, our manufacturing leaders, have helped shape our history; and you will continue to forge our future. Thank you for all that you do. This year, in celebration of Manufacturing Day 2015, we had the opportunity to speak with manufacturing leaders who are doing great things throughout Ohio to find out what they consider to be some of the most challenging aspects of owning a manufacturing business and they had a lot to say about today’s regulatory roadblocks.

Click here to read what other manufacturing leaders facing and why they are calling for regulation reform.

We also thought you might find this slideshow to be a valuable resource.

Take A Detour: Top 4 Detours For Financial Relief – Created with Haiku Deck, presentation software that inspires

We hope you have a happy manufacturing day and a great weekend.

Check out these articles to discover more tips for manufacturing leaders:

Research & Development Credit Benefits Businesses Of All Sizes

From Good To Great: 5 Ways You Can Improve Your Manufacturing Business

The Cost Of Reimbursing Employees For Health Care

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Drebit’s Top 5 Insights In September

Dear Drebit | October 2nd, 2015

Sharing top financial and business news keeps a frog busy. In September he helped get the word out about new changes within the credit card industry, fraud, cyber security … and even shared a little bit of personal finance advice.

Top 5 Insights

But, what were you reading? Great question! Below is a quick recap of the top blog post from September. If you haven’t already, take a look. Some of these tips could save you and your business a lot of money!

  1. Fraudulent Credit Card Transactions Will Become Merchant’s Problem On Oct. 1 – As of Oct. 1, 2015, the liability for fraudulent transactions will no longer be assumed by the credit card issuing institution. Instead, if you (the merchant) fail to adopt EMV technology, your business will be responsible for any loss that results from a fraudulent transaction. Is your business ready?
  2. Who Is That Email Really From? – E-mail Account Compromise (EAC) is a sophisticated scam that uses legitimate email accounts that have been compromised to target unsuspecting victims, oftentimes tricking even the most tech-savvy individuals. Want to know how to protect your email? Read on.
  3. 5 Financial Secrets Of Successful Business Owners – After following through with a 13-week cash flow for almost a year, you will have better insight into how to spend your profits to help your business generate additional cash and sales. Want to learn more? Check out Rea’s podcastUnsuitable on Rea Radio.
  4. Will EMV Technology Change The Online Payment Option? –  Does a company that doesn’t physically swipe credit cards have to worry about increased liability when the new EMV rules are implemented in October? The answer might surprise you.
  5. How Far Back Can The IRS Go For Tax Auditing? – As a CPA I am frequently asked, “How far back can the IRS look to audit my tax return?” That’s a great question. Can the IRS go back and audit your tax return from five years ago? 10 years ago? 25 years ago? Before you start to panic, rest assured that the IRS has a statute of limitations in place that generally puts a limit on the time allowed to audit you and assess additional tax. Keep reading to find out how far back they can go.

Drebit is glad that you’ve been finding the tips and insight shared on his blog to be valuable and we want to keep providing you with the information and advice that matters most to you. So, if you’ve got a burning financial or business question? Ask away, Drebit – and the bright team at Rea – is here to help!

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5 Financial Secrets Of Successful Business Owners

Dave Cain | September 29th, 2015
Financial Secrets Of Successful Business Owners - Rea & Associates - Ohio CPA Firm

After following through with a 13-week cash flow for almost a year, you will have better insight into how to spend your profits to help your business generate additional cash and sales. Visit to learn more and listen to Rea’s podcast — Unsuitable on Rea Radio.

Many business owners find difficulty coming to terms with their financial obligations. They will dedicate long hours combing through their company’s expenses, invoices and payroll to arrive at an annual budget, only to let the report sit until it’s time to repeat the exercise again a year later. A 13-week rolling cash flow helps take the stress off business owners when it comes time to make important strategic decisions throughout the year. But in order to get your company back on the right track, you must be ready to change the way you look at your company’s finances. These five financial secrets of successful business owners will get you on the right track.

Listen To Unsuitable On Rea Radio – Why $1 Million Doesn’t Matter

1)     Know how much cash you have on hand.

We’re talking about tangible cash here; and to know how much you actually have on hand you will have to look beyond the ending balance on your business’s bank statement while not letting yourself get caught up in a sea of technical information, graphs and presentations. The three most important questions you should be asking every week are:

  • How much money do we have in the bank?
  • What is our accounts receivable balance?
  • Who do we owe and how much we owe them?

The other information and reports are still important, they just aren’t as critical when you have to make big decisions without a lot of time to ponder your company’s short- and long-term financial state.

2)     Understand your billing practices.

To get an accurate picture of your company’s cash flow, you will need to take a closer look at your current billing practices to find out if you are getting your bills out on a timely basis. Don’t be tempted to gloss over this step. It may surprise you to learn that a lot of decision-makers and business owners think they are on top of their billing activity, only to learn that they’re not. A 13-week cash flow budget will expose this weakness and will get you back on track.

3)     Delegate ownership of your cash flow. 

We are all busy and it’s easy to be enthusiastic about implementing a 13-week cash flow strategy — in theory. But when it’s time to actually put your strategy into action it’s easy to blame “lack of time” for why you put it off. The good news is that you can delegate the work to someone who has the time. You really can’t afford to ignore your cash flow. When you understand where your money is coming in from and where it’s going, you will begin to see positive results.

4)     Review your cash flow projection often.

While it’s great to write out an annual budget or a three-year-projection, most owners will push the document to the side … where it will begin to gather dust. Then, when the day comes when you need to know the financial state of your company for decision-making purposes, you are left with inaccurate, outdated information. When this happens, your effectiveness and accuracy as a leader is challenged. It doesn’t have to be though. When you review your cash flow regularly, you arm yourself with the tools need to make financially strategic decisions. For example, after following through with a 13-week cash flow for nearly a year, you will gain greater insight into how to spend your business profits to help generate the additional cash and sales needed to facilitate sustained growth.

5)     Put your accrual basis profit in its place.

While you may still need to have an accrual statement or generally accepted accounting principle statement to appease regulatory agencies, you would do well to remember that when it comes to the lifeblood of your business, cash flow is king. In all likelihood, businesses of all sizes should consider keeping two sets of records — an accrual and a cash basis statement — to maintain your company’s compliance among all stakeholders.

You can’t spend accrual basis profit. You can, however, spend cash basis profit. Which is why, at the end of the day, you’ll find that your banker, your lender, your shareholders, etc. … will take more interest in your cash flow strategy and your cash flow budget than your other reports.

Want to learn more? Click here to listen to Unsuitable on Rea Radio and find out “Why $1 Million Doesn’t Matter.”

By Dave Cain, CPA (Dublin office)

Visit for more episodes of Unsuitable on Rea Radio or click here to subscribe to the podcast on iTunes or click here to listen to the show on SoundCloud.

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Don’t Get Blown Away By A Cash Windfall

Ryan Dumermuth | September 28th, 2015

4 Tips for Managing Sudden Wealth

Manage Sudden Wealth -  Ohio CPA Firm

Before you make a move with your money, take a little time to think about you want to do with your cash and consider getting some advice from a financial professional and review these four tips for managing sudden wealth.

Congratulations – you just won the lottery! Or, in a more realistic scenario, a significant amount of money has landed in your lap through an inheritance or the sale of property.

Now what?

As many who have been in your shoes will attest, it’s important to pause, take a step back, and evaluate your options before making any big financial decisions. Sure, that brand new sports car would look
great in your driveway, but will you regret spending the money down the road? Significant money creates many opportunities. Some? Wonderful. Others? Money pits.

Read Also: Considering Gifting Your Family Owned Business?

Before you make a move with your money, think it through and talk to a pro. The truth is, there’s no right answer, as no two financial situations are exactly alike. But these four steps will help you decide what’s best for you.

  1. SLOW DOWN. It’s easy to get caught up in the excitement of new wealth, and the tailspin that can ensue. But don’t allow yourself to lose your footing and don’t be tempted to make excuses for reckless spending.

    Avoid making any significant or impulsive purchases for at least a month or two. Take a step back from the moment and think long-term … what sort of financial goals do you have for the future? How do you really want to spend this money?

    Begin thinking about this and write down your thoughts. Writing down goals and thoughts is a proven method of helping you achieve your goals. It’s also helpful to have these things in writing when you meet with your advisors.

  2. FAIL FORWARD. Think about some of your past financial blunders. We’ve all made mistakes – but they’re only truly mistakes if you don’t learn something and prevent them from happening again. You know yourself better than anyone, and you owe yourself this honest examination. Use your missteps to your advantage.
  3. DO YOUR HOMEWORK. If your decisions affect others, talk with them before acting. If someone has an investment idea, consider whether it’s too good to be true.

    If you are approached to help a charitable cause, ask yourself if it’s something you’re passionate about. And make sure you have an understanding of the organization. You should also find out if they will publicize your contribution.

  4. CONSULT WITH A PRO. Navigating new wealth is complicated, and it’s imperative you find experts to help guide you through the process.

    Talk with a few people you trust and respect. If an advisor’s name is mentioned more than once, it’s probably someone you should talk to. If you already have an advisor, consider whether or not they are up to the task at hand.

    You’ll want to work with a CPA, attorney and investment advisor. Be prepared to invest some time meeting with each advisor in an effort to decide who to hire. Each one will play a different, but valuable role.

    Depending on your situation, you could lose a chunk of your newfound wealth to income taxes, so be sure to talk to a CPA with a specialty in income tax. You will want to know what you owe and when you owe it. More importantly, you’ll want to learn if you can avoid, reduce or defer any of the tax.

Finally, before selecting the advisors you want to work with be sure you understand all of the fees involved with their services up-front. Be prepared to get what you pay for.


Whatever the reason for your windfall, make sure you take the time to respect it – and your financial future. Email Rea & Associates to learn more about managing sudden wealth.

By Ryan Dumermuth, CPA, CFP (Mentor office)

Want to learn more about managing your sudden wealth? You may like these articles:

Can Your Charity Profit From Instant Bingo?
How Can I Make The Most Of My Retirement?
Estate And Gift Tax Exemptions: New Wealth Transfer Rules

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Will EMV Technology Change The Online Payment Option?

Joe Welker | September 21st, 2015
Online Payment Option -Ohio CPA Firm

Does a company that doesn’t physically swipe credit cards have to worry about increased liability when the new EMV rules are implemented in October?

Dear Drebit: Does a company that doesn’t physically swipe credit cards have to worry about increased liability when the new EMV rules are implemented in October? Sincerely, Online Payments Only

Dear Online Payments: As you may already know, I recently wrote an article to inform merchants about the Oct. 1 deadline to implement Credit Card EMV (EuroPay, MasterCard and Visa) technology. When this change takes effect, the liability for fraudulent transactions will no longer be assumed by the credit card issuing institution. Instead, if you continue to use the credit card’s magnetic stripe to process payments, your business will assume liability for any resulting fraud. For most businesses – especially smaller businesses – a single instance of fraud could be crippling.

EMV technology essentially swaps out the magnetic stripe used on credit cards today for an embedded chip. The chip scrambles sensitive cardholder data at the point of sale, which makes it increasingly difficult to fraudulently access and replicate consumer data.

Click here to read the full article.

But what changes lie ahead for businesses that utilize online payment methods and don’t require customers to physically swipe their credit card to pay for a product or service? Do they need to be concerned about this liability switch on Oct. 1 too?

EMV Concerns For Online Merchants

Your third-party processor (such as PayPal), is responsible for ensuring that the payment is authentic. These companies validate payments using a variety of methods.

Natalie Gagliordi, a blogger with Small Business Matters, writes that “for most online merchants, whatever payment processing technology they are using will likely contain out-of-the-box security and authentication protocols.” PayPal, for example, “has developed complex end-to-end encryption to help protect consumers and merchants with their payment information.”

But just because your business doesn’t bare the sole responsibility for keeping your customers’ credit card data safe, doesn’t mean you have nothing to worry about – quite the contrary. Some experts expect credit card fraudsters to pay more attention on hacking online consumer data. This means, for your customers’ sake, you must continue to be informed of online security best practices and should not only be knowledgeable about what your third-party payment processor is doing to keep credit card data safe, but what your third-party payment processor requires of you to maintain your compliance. This could include maintaining current antivirus protection, a secure firewall and other online safety protocols.

The EMV Migration Forum’s Card-Not-Present Working Committee recently published an informative whitepaper to address the growing threat of Card-Not-Present Fraud. This resource will give online merchants a little more insight into the numerous options currently available to help authenticate online payments.

In the meantime, if you have additional questions or concerns, contact your third-party payment processor immediately. Requirement 12.9 of the Payment Card Industry Data Security Standard v3.0 states that they must provide you with – in writing – the details of its role in providing PCI compliancy, as well as any requirements of your organization. Click here to learn more.

How Can Drebit Help You?

Readers, do you have questions about data security, fraud, accounting, succession planning and other general business topics, but don’t really know who to ask? Let Drebit help find the answer! Simply fill out the brief form at the top, right side of this page. You can also click here to reach out to one of fraud experts directly. If you like the advice we offer, why not click here to subscribe to Dear Drebit and get notified of new articles and updates the minute they are posted?

By Joe Welker, CISA (New Philadelphia office)  

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Malware Threat Spreads To Smart Phones

Joe Welker | September 16th, 2015
Malware Goes Mobile  Ohio CPA Firm

According to the digital media analytics company comScore, between the months of December and March 2015, more than 187.5 million people in the U.S. owned smartphones. During that time, Google Android led the pack as the number one smartphone platform with 52.4 percent platform market share. In other words … that’s a lot of potential LockerPIN victims.

Would You Pay A Hacker’s Ransom If Your Phone’s Data Was At Risk?

Researchers and IT security experts from ESET, a global IT security company, recently announced that they had discovered a malware application that is designed to encrypt files and change PINs on Android devices in the United States. In return, victims are demanded to pay up to the tune of $500. Only then will hackers provide users with the recover key.

If it continues to spread, this form of malware could result in a staggering number of victims. Once again we are reminded of how important it is to vigilantly protect ourselves against fraudsters who will continue to exploit such weaknesses in our technological infrastructure.

According to the digital media analytics company comScore, between the months of December and March 2015, more than 187.5 million people in the U.S. owned smartphones. During that time, Google Android led the pack as the number one smartphone platform with 52.4 percent platform market share.

Read Also: Could Your Company Be Ransomeware’s Next Victim?

Malware Goes Mobile

The malware, called LockerPIN, spreads via third party applications, which are downloaded by the user to their Android device. Similar to the CryptoLocker and CryptoWall malware that has inundated users over the past several years, LockerPIN spreads malware’s reach to the mobile user.

Originally discovered in Ukraine in 2014 the malware has been modified to the point that it is just now making its North American debut. Disguised as a system update, the application changes the user’s PIN to a random setting without their knowledge. The worse part? The only known recovery solution is to perform a complete factory reset, which will result in the loss of all your data.

Fair Warning

It’s only a matter of time before this malware progresses to the point of being able to infect all phones. In the meantime, there are actions you can take to protect yourself.

1)     Never download apps outside of certified app stores.

2)     Back up your mobile devices to your computer or to the cloud regularly.

3)     Do not grant administrator privileges to apps unless you truly trust them.

4)     Stay away from suspicious apps and sites.

By Joe Welker, CISA (New Philadelphia office)

Want to learn more ways to protect yourself and your business from IT threats? Check out these articles.

Who Is That Email Really From? Red Flags To Be Aware Of When Opening Your Email

Who’s Fishing For Your Data Today?

Could A Cyber-Attack Cripple Your Business In 2015?




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