What was Management Recruiters' estimated effective tax rate for 2022?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
| December 31, 2022 | December 31, 2021 | |||
|---|---|---|---|---|
| Deferred tax assets | ||||
| Workers' compensation claims liability | $ 1,227 | $ | 1,517 | |
| Bad debt reserve | 17 | 6 | ||
| Accrued vacation | 73 | 44 | ||
| Impairment of notes receivable | 63 | 464 | ||
| Stock based compensation | 268 | 145 | ||
| Accrued compensation | - | 262 | ||
| Net operating loss carryforward | 123 | 228 | ||
| Other | 87 | - | ||
| Total deferred tax asset | 1,858 | 2,666 | ||
| Deferred tax liabilities | ||||
| Depreciation/amortization | (1,918) | (2,208) | ||
| Cash to Accrual - 481 Adjustment | - | (931) | ||
| Total deferred tax liabilities | (1,918) | (3,139) | ||
| Total deferred taxes, net | $ (60) | $ | (473) |
At December 31, 2022, the Company has a federal net operating loss carry-forward of approximately $585 thousand available to offset future federal taxable income. The federal net operating loss may be carried forward indefinitely, however, utilization of future net operating losses may be limited due to ownership changes under applicable sections of the Internal Revenue Code.
Management estimates that our effective tax rates was approximately 13.7% fo
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the company estimates its effective tax rate was approximately 13.7% for 2022. This figure represents Management Recruiters' management's assessment of the actual tax rate they expected to pay after considering various factors that can cause it to differ from the standard federal income tax rate.
Understanding the effective tax rate can be important for prospective franchisees as it provides insight into the financial management and profitability of Management Recruiters. It reflects the actual taxes paid relative to the company's income, taking into account deductions, credits, and other tax benefits. A lower effective tax rate could indicate that Management Recruiters is effectively managing its tax liabilities, which could positively impact its financial performance.
It's worth noting that this is just an estimate made by Management Recruiters' management, and the actual tax liabilities could vary. Additionally, the FDD mentions that the company had a federal net operating loss carry-forward of approximately $585,000 available to offset future federal taxable income as of December 31, 2022. This loss carry-forward could potentially influence the company's future effective tax rates. Prospective franchisees should consider these factors when evaluating the financial health and tax strategies of Management Recruiters.