Are you planning for year end? A year end check-up is overdue.

Year end brings the opportunity to look at ways to minimize taxes if possible. The American Taxpayer Relief Act of 2012 (ATRA) which became effective in 2013translates to an impact on your 2013 tax return. 

Every dollar is especially important in a small business and each of us has a unique situation – call so we can discuss your needs and options while there is time to effect change. Issues to consider: 

Health Care Reform - Affordable Care Act (ACA)

What is the effect on your business? There are still many questions yet to be answered but its important to identify a long-term plan that anticipates the eventual rollout of the reporting and penalties for employers.

“The Small Business Health Care Tax Credit can help offset the cost of coverage for many companies by providing a credit against taxes, but there will be changes beginning in 2014. The credit rises to 50% of premiums paid (35% for small tax-exempt employers), but it only applies to small businesses that participate in the Small Business Health Options Program (SHOP) Marketplace. We will be happy to answer your questions about the SHOP, as well as other provisions of the ACA” reports America Counts on CPAs.

Did you know there is a 90-day limit for eligibility for employer-provided health coverage for new hires?

New Tax Laws

• New business property after tax deductions.
• Individuals within the highest income tax rates will see tax rates on dividend income and long-term capital gains rise to 20% . High-income business should consider ways for minimizing their tax liabilities.
• Proper foresight and planning may minimize invest income tax for high earners.
• Changes to alternative minimum tax (AMT) might now affect you.
• Investment income taxes might now change the business entity organization that suits your business needs and tax situation. 
• New simplified optional safe-harbor method allowing for home office deductions - is it right for you?

Other Key Considerations

• Use the options for greatest tax benefits for retirement options that suit you and your business. 

• New business this year? Proper deductions should be discussed before year end.

• If your business provides services, sells products or otherwise has a presence in more than one state, it may be subject to tax withholding, filing and payment requirements in many of those states. We can help you ensure that you are compliant with their laws and make use of all tax planning opportunities.

Call for a check-up today.  We don't want to miss any opportunity to reduce expenses for your business. 

Why Commingling Business and Personal Funds Is Not a Good Idea

Commingling funds is a pretty universally frowned upon business strategy; although, is fairly widely practiced in small businesses.

For those who don’t know what “commingling funds,” is it is when a business owner pretty much treats their business funds as their own. Some common practices range anywhere from depositing checks made payable to their business in to their personal account or using business money for personal reasons or personal expenses; basically, commingling is the intertwining of business and personal funds.

‘Corporate veil’ is a legal expression to describe the best business practice of keeping business funds and personal funds separate, clean and documented. When someone commingles their finances they can end up getting their corporate veil pierced. When a company goes through all the work of becoming an LLC or corporation there are many activities and documents completed to protect the business owner with a ‘corporate’ wall so they limit their personal liability. There are Articles of Organization, filing fees, Operating Agreements and the like. Legal troubles can put all the incorporation efforts at risk if the court determines that the veil has been pierced.

When courts look into whether or not to “pierce” a company’s “veil,” one of the first things they look into is commingling of funds. When funds are found to be commingled, courts will then hold your personal assets liable. 

All this information is fine and dandy, but what do we do to keep from our business veil from being pierced? Thankfully, it’s actually quite simple, if you can keep with the mindset. 

Viewing the funds as two separate entities is a great start to keeping a professional mindset. Even as a small business it is important to set up separate accounts for your business and personal needs. Personal tax and business tax are treated differently. Your personal expenses may not qualify as a valid business expense. It’s best to keep things separate and consult your CPA for issues that may be unique to your business.

Many people view commingling as a sloppy practice. It’s bad legally but it is just bad business.One of the main reasons it’s bad business is because it makes accounting very difficult and inaccurate. It can be a way to shelter earnings, under report taxes and hide other legal and tax obligations.

Accounting tells you how your business is doing and is used to show you how to improve your business and where you don’t need to spend so much time improving. When commingling, it can be difficult to find out where your personal finances begin and your business finances end. Cash flow issues can be difficult to navigate. Without being able to clearly define each part you will have trouble seeing which products and services are performing well or not. 

When commingling you could be cheating your business and putting yourself at legal risk.

Do you have a question on commingling – we’d be happy to answer it.

Again, thanks for reading and leave a comment or question below!

Seniors and Fraud - What You Need to Know to Protect Your Loved Ones

It’s crazy to think of all the ways in which the security of your information can be compromised these days. According to the Department of Justice (2010), 7% of all households will experience fraud with one of the members who is 12 or older. 

Generally speaking, seniors are a trusting group of people who have paid off their large loans, and have built up assets and savings throughout the years. This is an attractive market for someone looking to run a scam. Some of the types of fraud that are common among Seniors:

• Telemarketing Fraud
• Internet Fraud
• Investment Schemes
• Reverse Mortgage Scams
• Funeral/Cemetery Fraud
• Counterfeit Prescription Drugs
• Health Care/Insurance Fraud

Previously, we’ve touched on how you can avoid tax fraud by getting a CPA but following are some things to consider when thinking of people who may be at risk for other kinds of fraud...you’ll soon see that this is a growing concern!

A Senior’s Risk - Medical Identity Theft/Health Care Fraud

Health care identity fraud is one of the more common and relevant issues with seniors. In 2012, consumers age 60+ filed 52,610 complaints of identity theft with the Federal Trade Commission. These complaints account for about 19% of total identity theft complaints. Frequently, seniors will carry important medical documents and information with them (Medicare or Social Security Cards), which is problematic since vital information is much more accessible with these pieces of vital data… and unfortunately that includes people with the wrong intentions.

Much of health insurance fraud is committed by people within the healthcare system and it’s often much later that the victim will discover the full extent of the damage. There are a range of different scams. The FBI does a pretty good job of outlining the different ways people are being scammed and tips to avoid fraud. 

Financial Exploitation

There are numerous ways in which scammers can ruin one of our loved ones right into the thick of a horrible financial fraud. Credit card fraud is very popular. Because seniors typically check their credit reports infrequently, carry lower credit usage, and generally have accumulated savings and/or assets, they are quite attractive targets! With all of these things going, why wouldn’t someone want to try to apply for a new credit card under Grandpa Earl’s name?

Getting a CPA 

This is one of the most important ways to ensure that you take all the precautions to avoid fraud. A CPA is a great resource, and an expert in the ways that you could potentially vulnerable to scams that can: damage your credit, drain your savings, and affect your insurance rates. Rest assured, Tom Bulger is an expert and would like to talk to you about the ways you can avoid being the target of fraud. 

Contact him today with the ways you think a loved one, or yourself may be particularly vulnerable to fraud or for a second opinion on something that feels questionable.