Articles Archives | Page 5 of 7

Supreme Court Upholds Individual Mandate

June 29, 2012/in Articles/by revel

Soon everyone will need to carry health insurance.

The Supreme Court upheld the individual mandate in the Patient Protection and Affordable Care Act on Thursday, July 28, 2012. In the Court’s 5-4 majority opinion, they concluded that the mandate is valid under the Constitution’s Taxing Clause. The individual mandate requires most U.S. citizens and legal residents to maintain minimum health insurance coverage beginning in 2014.

Do you have questions regarding how this mandate will affect small business owners? Email Ashley Clonan, and the tax professionals at H&S Companies will answer your questions via our blog.

CNN Money Names Michigan One of The 10 Fastest-Growing States

June 13, 2012/in Articles/by revel

Michigan’s economy is growing according to CNN Money. (Please note, graph illustration does not represent actual growth.)

According to CNN Money, Michigan is among the 10 fastest-growing states in the country. In 2011, we experienced growth at a rate of 2.3%; our economy is worth $385 billion dollars. The article attributes this growth to the revival of the auto sector, which contributed to about half of our economic growth last year.

What’s the difference between a vision statement and mission statement?

June 11, 2012/in Articles, Locations & Services/by revel

Take time to sit down with your team to define your vision and mission statements.

The strategic planning process starts with knowing and defining your vision and mission statements. Together these two statements make a powerful impression regarding what’s important to your company, but people frequently think they’re the same thing. So, what is a vision statement and mission statement?

A vision statement defines what your organization wants to accomplish. What is your vision of the future?

A mission statement defines what your organization sets out to do each day. What makes you unique right now?

Remember, the mission should drive the vision – what you do each day, should push towards achieving what you want to see for the future. Once these two statements are defined, you can work towards developing a strategic plan that helps accomplish your stated goals.

For more information about strategic planning, contact Lynda Nance.

Lynda Nance
Business Development Strategist
616.884.7952
lyndan@hscompanies.com

Another Charitable Contribution Deduction Lost on a Paperwork Technicality

June 8, 2012/in Articles, Locations & Services, Tax Tips/by revel

If you made a charitable contribution and received a ‘perk’ in return, such as a free round of golf, you need to make sure you document it correctly.

Last week, a couple was denied their $18.5 million deduction due to a paperwork technicality, this week there was another case of a taxpayer losing their deduction based on a paperwork problem.

A $25,000 charitable contribution deduction was rejected because the donee organization failed to document whether the donor received any ‘perks’ as a result of the donation.

Why Does This Need To Be Documented?

This needs to be documented because you may only deduct the donation less any perks received. Here are a few examples:

You donate $200 to your favorite charity and, as a thank you, they give you two tickets to an MSU football game. The tickets have a fair market value of $100. You may only deduct $100 because of the ‘perk’ you received.
Concert tickets go on sale with all proceeds supporting your favorite charity, so you buy them for $50. The concert tickets have a fair market value of $14. You may only deduct $36.
You buy tickets to a benefit dinner for $500. The fair market value of the dinner and drinks you receive is $100. You may only deduct $400.
At a silent auction you bid $5000 on and win a flat screen TV. The fair market value of the TV is $1000, so you may only deduct $4000.

What if I received documentation from the organization I donated to, but they failed to document all the required information?

Contact the organization as soon as possible to receive proper documentation! The IRS has been cracking down on compliance with charitable contribution deductions, so you will want to make sure to keep your paperwork organized and ready for next tax season.

Further Reading + Useful Links
This Tax Season is Almost Over, But Stay Organized for Next!
In the News: Couple Loses $18.5 Million Deduction on Technicality
IRS Publication 561, Determining the Value of Donated Property
IRS Publication 526 (2012) Charitable Contributions
Form 8283, Noncash Charitable Contributions

Improve Your Workflow, Increase Your Productivity

June 6, 2012/in Articles, Locations & Services/by revel

Flow Chart, Lean Process Improvement, Improve Work Flow

By writing down your process, you are able to identify and remove inefficiencies.

There are a variety of strategies businesses can use to improve their workflow and increase their overall productivity. Perhaps you’ve considered Enterprise Resource Planning to align your computer systems and databases, or you’ve looked into strategic planning to get your company on a path to success. Lean Process Improvement is another tool businesses can employ to make their operation run as smoothly as possible.

What is Lean Process Improvement?
Essentially, to ‘Lean your process’ means to look at what is currently being done to bring a product or service to market and remove any inefficiencies in that process. Things like duplicating work, excessive wait times, or even extra, unnecessary packaging all slow down your ability to sell your product. Which also slows down your ability to earn profits.

It’s important to understand that Lean Process Improvement can help any business; it’s not just for manufacturing. For example, perhaps there is a duplication of work in gathering information from new clients. By eliminating those extra steps, you could deliver your service faster and perhaps bring on more clients.

How Does Lean Process Improvement Work?

Meet with key stakeholders to map out the current state of business. How do things run currently?
Identify wastes in the process such as excessive wait times or over production.
The last step is to determine how the process will run, and then implement the new plan.

Of course, product quality is key, and it’s important to ensure that quality isn’t compromised. A professional, trained in Lean Process Improvement, can help work key stakeholders through the mapping process, and ensure proper implementation and follow-up occur.

If you’re interested in learning more about Lean read, Save Time & Money with Lean Manufacturing. Or learn more about Lynda Nance in our December newsletter.

Lynda Nance
Business Development Strategist
616.884.7952
lyndan@hscompanies.com

Fraud Happens. Learn the Facts.

June 4, 2012/in Articles, Fraud and Forensic Investigation, Locations & Services/by revel

Even your most trusted employee could be tempted to commit fraud under the right circumstances. Make sure you know how to prevent that from happening.

We’ve written a lot about the fact that fraud happens in small businesses. Often times people think, “it could never happen to me”, but it does and recovering the money is no easy task.

According to the ACFE’s Report to the Nation, more than 3/4s of the frauds reported in their study were committed by employees who worked in one of the following six departments: accounting, operations, sales, executive/upper management, customer service, or purchasing. In 2012, employees were found to be the fraudsters 43% of the time, managers 34.3%, owners/executives 18.5%, and others 4.2%.

Ensuring that you have a system of checks and balances between departments and between position levels can help deter fraud. Just because someone is your most trusted employee doesn’t mean they couldn’t or wouldn’t commit fraud. According to the report, fraud by employees resulted in a median loss of $50,000; managers, $150,000; owners/executives, $373,000; and others, $86,000.

And remember, there could be more than one employee involved in the scheme. The study found that in 2012, 32.9% of US cases involved two or more perpetrators, which resulted in median losses of $175,000. Try to segregate duties as much as possible or rotate job duties to try to deter fraud schemes.

To learn more about ways to prevent fraud in your business contact Kit Powell, Certified Fraud Examiner.

Kit Powell
Certified Fraud Examiner
231.924.8035
kitp@hscompanies.com

In the News: Couple Loses $18.5 Million Deduction on Technicality

June 1, 2012/in Articles, Tax Tips/by revel

If you donate noncash items to charity, make sure you file the proper paperwork, or you could lose your deduction.

A blog on the Wall Street Journal recently ran a story about a couple who lost an $18.5 million charitable contribution deduction because they failed to include the correct paperwork at the time they filed their tax return. Below is a summary of what happened, or visit the WSJ blog to read California Couple Loses $18.5 Million Charitable Deduction on Technicality by Laura Saunders.

The Sacramento couple donated property, which they valued at $18.5 million, to charity
The IRS challenged the value, and the couple hired an outside appraiser to asses the property (which he valued at $20.3 million)
The couple lost the right to the deduction because a.) they didn’t attach the appropriate paperwork at the time they filed, b.) the taxpayer wasn’t a qualified appraiser, c.) the independent appraiser was not hired in a timely fashion (from the time they filed)

This story is unfortunate because the couple lost on a technicality, but it reminds us how important it is to follow the IRS reporting guidelines. Below are record keeping guidelines to keep in mind for noncash donations:

Information to Keep

Name of the charitable organization
Date and location of the contribution
A reasonable, detailed description of the property you contributed
The fair market value, as well as, the method you used to determine the value
Cost or other basis of the property
Although it is not required, it is a good idea to keep photographs of the items donated (ie if you donate 10 items to Goodwill, photograph the 10 items before you drop them off)

If the donation is worth less than $250

Keep a receipt or similar documentation, unless you are unable to obtain such information (ie you brought your donation to an unattended drop-off site)

If the donation is worth $250-$500

You will need written acknowledgement from the organization, containing the following information: name and address of the organization, date and location of the contribution, description of the property, as well as, whether any ‘perks’ were provided to the donor and the fair market value of ‘perks’

If the donation is worth $501-$5000

The same requirements as $250-500 level apply, as well as, records indicating how the property was obtained, the date it was acquired, and the adjusted basis of the property

Remember, the forms and reporting guidelines are complicated and vary based on what you are donating/ how much it is worth. The IRS is starting to crack down more on charitable contributions, so as you make donations throughout the year, be sure to keep the appropriate documentation. If you have any questions, contact an H&S tax professional.

Sources:
2011 Quickfinder (Tax Regulation Guide)
California Couple Loses $18.5 Million Charitable Deduction on Technicality by Laura Saunders

Health Insurance Premium Credit Highlights

May 24, 2012/in Articles/by revel

The health insurance premium credit is designed to make health insurance affordable to taxpayers whose household income is 100% to 400% of the federal poverty level.

The IRS issued final regulations on the health insurance premium credit scheduled to go into effect in 2014. Here are a few highlights:

This coming June, the Supreme Court will rule on the constitutionality of the Affordable Health Care Act, and may throw the whole thing out.
The credit is designed to make health insurance affordable to taxpayers whose household income is 100% to 400% of the federal poverty level (FPL). In 2011, the FPL for a two-person household was $14,710 and $22,350 for a four-person household. So, this credit will affect those with income up to $58,840 in a two-person household and $89,800 in a four-person household.
Those who are eligible, will purchase coverage through the Affordable Insurance Exchange. The Exchange will then make a subsidized payment to the qualified health plan on behalf of the eligible person.
The amount of the subsidy is based on information given at the time of enrollment and is the lesser of the premium for the qualified health plan, or the excess of the premium for the benchmark plan (the second lowest “silver plan”) over the applicable percentage of household income. The CBO estimates the average subsidy to be over $5,000 per year.
At tax time, the individual will reconcile the actual credit for the tax year computed on the tax return with the amount of advanced payments. The difference becomes a tax due or refund. There is a cap on the repayment of $600-$2,500.
An employee who is in an employer-sponsored plan, that is deemed as non-affordable, would also qualify for the subsidy. A plan is considered non-affordable if the employee is required to contribute 9.5% or more of his household income.
Large employers will be penalized if even one fulltime employee is certified to receive the credit because the employer sponsored coverage does not provide minimum coverage or is unaffordable to the employee. The employer uses 9.5% of the employees wages instead of household income in figuring the penalty.

Please keep in mind, there will be more regulations to come clarifying how to calculate this credit and penalty. If you have any questions please contact Mike Farmer at 231.798.6503.

Social Security Statements Now Available Online

May 21, 2012/in Articles/by revel

Social Security benefits are based on an average of earnings contributed throughout a wage earner’s lifetime; so carefully reviewing your gross wage information is important. (Photo Credit: Fotolia.com)

The Social Security Administration (SSA) announced earnings and benefits statements are now available online at socialsecurity.gov.

“Our new online Social Security Statement is simple, easy-to-use and provides people with estimates they can use to plan for their retirement,” Commissioner Astrue said in a press release on the SSA’s website. “The online Statement also provides estimates for disability and survivors benefits, making the Statement an important financial planning tool. People should get in the habit of checking their online Statement each year, around their birthday, for example.”

The SSA advised people to check their Statements to ensure their earnings look correct. Social Security benefits are based on an average of earnings contributed throughout a wage earner’s lifetime; so confirming that your gross wages are accurate is important.

In February 2012, the SSA also announced they would resume mailing paper Statements to workers over age 60. They plan to begin mailing these to workers age 25 and older later this year.

To view the new tool, visit: socialsecurity.gov/mystatement

Strategically Planning for Success

May 14, 2012/in Articles, Locations & Services/by revel

A great plan requires input from the whole team. (Photo Credit: office.microsoft.com)

Strategy is defined as a plan of action designed to achieve a vision. Strategic planning is the process used by organizations of all shapes and sizes to define their long-term strategy or direction to help them “win”. When utilized correctly, a strategic plan will enable an organization to make decisions, and allocate resources appropriately so that the long-term strategy is achieved.

A comprehensive plan involves the following components: Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, vision/mission, long-term objectives, mid-term goals, short-term tactics, and metrics.

As with all processes, success requires the knowledge of the tools available and the ability to implement. The most successful planning sessions utilize a series of brainstorming exercises followed by clarifying questions, and a vote of the members to determine the most important ideas generated. During the brainstorming sessions, all ideas are recorded and nothing is dismissed. This is where the best “outside of the box” ideas are created. The brainstorming process is followed to create all of the components of the plan, with the exception of the short-term tactics and metrics.

Successful implementation occurs only when SMART (specific, measurable, achievable, relevant, time-framed) goals and tactics are set and metrics are in place. It is important when setting these goals to ensure that the achievement of the goals will lead to the stated long-term objectives and mission of the organization.

Strategic planning is like a GPS. Used correctly, it will guide an organization to the destination in the most efficient manner.

Want to learn more about strategically planning for your success? Contact Lynda Nance, Business Development Strategist.

616.884.7952
lyndan@hscompanies.com