Tax planning is good for corporations too

Tax planning is good for corporations too

 If you own a calendar-year corporation, you can benefit from planning moves you make before December 31. For example, corporations can accelerate or defer income or deductions to stay within a certain tax bracket. You'll also want to look at your corporate alternative minimum tax exposure to determine whether you qualify for an exception to the tax. Finally, reviewing estimated tax payments can save penalties. Call us for more business planning strategies.

Be aware of credit card "liability shift"

Be aware of credit card "liability shift"

Does your business accept credit cards? You may already know of the recent update to a new style of cards embedded with microchips. This new technology, also known as EMV (for Europay, MasterCard, Visa), makes credit card fraud more difficult. Your business is not required to move to the new technology to process these cards. But you should be aware that as of October 1, 2015, your business is responsible for some fraudulent transactions that were previously covered by the cardholder's bank. Give us a call for details.

2016 health care enrollment begins November 1

2016 health care enrollment begins November 1

The health insurance Marketplace (www.healthcare.gov) "open enrollment period" began November 1 for 2016 individual health insurance coverage. Open enrollment is the annual period of time during which health insurance companies must accept your application regardless of your health history. Once open enrollment is over – January 31, 2016, for 2016 policies – you can only get coverage if you have circumstances that allow you to qualify for a special enrollment period.

Turn your part-time employees into winners

Turn your part-time employees into winners.

Part-time employees play a valuable role in a small business. They help deal with fluctuations in workload and can job-share with full-timers. In addition, because part-timers often look for flexibility in hours, you may find a skilled worker whose schedule fits perfectly with existing staff.

But part-timers can turn into a liability if not managed well. You could end up with poorly motivated workers who are unsure of their duties, unfamiliar with your company, and uncertain who they report to. Here are tips to keep this from happening.

Think before you hire. Decide what you want your new employee to do, what work hours are expected, and who he or she will report to. Does the position have well-defined duties? Or does the work involve filling in wherever needed? Decide on the pay and benefits.

Communicate clearly with your new part-timer. Explain the required duties and the chain of authority. Be very clear on hours and benefits, while remaining flexible enough to accommodate school or other commitments.

Communicate clearly with your full-time staff. Explain why you're hiring a part-time employee. Clarify what the new employee will and will not be expected to do. Designate who will manage and assign work to the part-timer.

Make the part-timer feel like part of the company. Provide introductory training on specific duties and the company's business and policies. Assign a mentor or "buddy" – someone the new person can turn to with everyday questions.

Monitor progress. Don't forget about your new employee after hiring. Provide feedback on performance and recognition for tasks well done.

With a sound plan, hiring a part-time employee can be a win-win situation.

Breakeven analysis helps with business choices

Break even analysis helps with business choices

Break even analysis is an important and useful tool in business. Whether you're starting a new business, expanding current operations, contemplating an acquisition, downsizing, or approaching banks and other potential lenders, you'll want to know your break even.

Break even is defined as the point at which costs equal income – no profit, no loss. It's an excellent starting point for finding out where your business is and where it can go. Break even is the first step in planning future growth. It shows how much sales volume you need to cover fixed and variable expenses. Once your company has reached break even, all gross profit beyond that point goes directly to improving the bottom line.

Of course, break even analysis has limitations. For example, it ignores the importance of cash flow and makes the assumption that fixed and variable expenses will stay within the parameters used to calculate the break even point. Despite these shortcomings, break even can help with business planning.

Here's how to calculate your business's break even.

First, review your annual financial statement to learn your fixed and variable expenses. Fixed expenses are those that don't generally vary in relation to sales volume. Rent, for example, usually stays constant no matter the amount of your sales. The same is typically true for depreciation, utilities, and insurance.

Variable expenses are the cost of goods sold and other costs of sales, such as direct labor and sales commissions.

What about costs that are part fixed and part variable? Split these into separate categories based on your knowledge of your business.

Next, compute your gross profit percentage by dividing your net sales less your cost of goods sold by your net sales. Then divide your fixed costs by your gross profit percentage to arrive at break even.

Example. Say your fixed costs are $10,000 and your gross profit percentage is 25%. Your break even point is sales of $40,000 ($10,000 ÷ 25% = $40,000).

Too much math? Call us. We're happy to help you calculate your business's break even point and evaluate your profit structure.

Protect yourself from ID theft with credit report check

Protect yourself from ID theft with credit report check

Even if you're covered by a credit monitoring service, you may want to keep an eye on your credit report – and you can still do that for free at www.annualcreditreport.com. That's the only official website, so don't be fooled by other "free" claims.

At the site, you can get one free report annually from each of the three major agencies. Why bother? Identity theft is a multi-billion dollar industry, and checking your credit rating is one of the best ways to protect yourself. You might also be surprised at the number of mistakes on credit reports. Relatives or even non-relatives with the same (or similar) last name could have their credit information jumbled with yours. Individual companies could have incorrectly reported a negative credit occurrence (in the form of a delinquent payment or nonpayment) to the reporting agencies. Reviewing your credit report is a way to find and fix those issues.

If you find an error, both the credit reporting company and the company that provided the information about you are responsible for making corrections. You'll have to submit a written report and you'll get written results when corrections are made.

Give us a call if you're having problems with your credit reports. We're here to help.

Decide when to start social security benefits

Decide when to start social security benefits

Whether you should take social security retirement benefits at the earliest possible date or defer benefits until reaching normal retirement age (or even age 70), depends on several factors. For example, you'll want to consider your overall health and life expectancy, your plans to earn income before reaching normal retirement age, anticipated returns on your other investments, and, surprisingly, your guess about the future of the social security program. As you can tell, the decision isn't one-size-fits-all.

For instance, say your savings won't cover ongoing expenses and you need to rely on social security income to make ends meet. In that case, deferring social security benefits may not be an option for you.

But if your financial circumstances offer more financial flexibility, deferring your benefits can be an advantage. For each year you delay (up to age 70), the payouts increase. In addition, if you plan to earn significant income between age 62 and your normal retirement age (65-67, depending on the year you were born), putting off your social security benefits may make sense. That's because any benefits in excess of specified limits ($15,720 in 2015) will be reduced. You'll lose $1 of benefits for every $2 in earnings above the limits. Note that you won't lose any social security benefits (regardless of earnings) once you reach full retirement age.

On the other hand, let's say you've accumulated a healthy balance in your 401(k) and expect that account to generate a good annual return. Under this scenario, you might be better off leaving your retirement savings alone and taking your social security benefits early to cover living expenses.

Or perhaps your family has a history of health problems and you don't realistically expect to live into your 80s. Again, taking social security benefits at age 62 might be a good choice.

For help with this important decision, please give us a call.