Select the Right Health Insurance for Your Practice

Post Date:

September 16, 2019

If you have employees, you know how important health insurance is for your benefits package. It also takes a big bite out of your budget. Selecting the right insurance for your company is extremely important for employee retention and maintaining your bottom line. Here are tips to help you find the best health insurance for your business:

Know the size of the network.A popular way to lower insurance costs is opting for a smaller network of health care providers. Known as narrow provider networks, coverage is limited to a much smaller group of clinics and hospitals than traditional plans. But while the cost savings are nice, employee satisfaction is likely to decline as some of them will have to change doctors to stay in network. When researching insurance options, be sure to compare the network size to industry averages.
Watch for coverage limits.Lifetime and annual dollar limits for essential health benefits were banned in 2014, but limits still appear in other ways. Dental services, for example, are exempt from the dollar limits and often have annual and lifetime coverage limits. Another way insurance providers hedge their risk is by limiting the number of a certain type of visits, like for chiropractic care or physical therapy.
Don’t forget prescription coverage.Many health insurance programs don’t include full coverage for prescription drugs, so you may need to add supplemental insurance. Pay special attention to the coverage differences between brand name and generic drugs. Also review any deductibles and other limits. Another type of coverage available is a prescription discount program. Discount plans simply charge you a subscription cost that allows you to use a contracted discount.
Understand what isn’t covered.When trying to sell you on their plan, insurance providers do a good job showing you what they cover. What can be harder to figure out is what they don’t cover. Some of the types of services that may not be covered are vision care, nursing home care, cosmetic surgery, alternative therapies like massage therapy or acupuncture, and weight-loss procedures.
Be prepared to provide employee data.The process of obtaining a quote for health insurance can be an overwhelming task. Health insurance companies will want, at a minimum, a list of employees with some pertinent details like age, sex, coverage details (self, spouse and other dependents), and home zip code. They will want the forms filled out by all employees, even those that are opting out of insurance coverage. If you are working with a benefits broker, they can help you prepare what will be needed in advance to speed up the process.

Shopping for health insurance for your business is complicated. Taking the appropriate time to understand each coverage option and the associated costs will benefit both your business and your employees' wellbeing.

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Avoid the Pitfalls of Selling Property to Family

Post Date:

August 9, 2019

Suppose you own property you intend to transfer to your loved ones. Perhaps you are considering giving your children an ownership interest in your principal residence. Before you act, you should review the tax consequences of your decision. Specifically, tax law includes several provisions involving sales to related parties. As you might imagine, this covers relatives like your children, grandchildren and siblings, but it also applies to business entities you own. Here are four common situations you may encounter, and tips to help you avoid tax trouble:

Installment sales.With an installment sale of investment or business real estate over two or more years, you can defer tax on your gain until the tax years in which payments are actually received. However, if you sell the property to a related party who disposes of it within two years, the remaining tax is due immediately.

Tip: To solve this problem, insert language in the legal agreement that does not allow the disposition of the property within two years.
Selling at a discount.If you’re selling a house to a related party, you may wish to give that person a sweetheart deal. Unfortunately, the IRS may reclassify the transaction as a gift if the property is sold at considerably less than its fair market value (FMV). Fortunately, you have some wiggle room. If you discount the sale by less than 25 percent, you should be OK.

Tip: Err on the side of safety by having an appraisal of the property before the transfer date OR build documentation that justifies the FMV.
Transferring remainder interests.In some cases, a homeowner may transfer an interest in a home to his or her estate while continuing to live there. Although this may meet certain objectives, the estate can’t take advantage of the $250,000 home sale exclusion ($500,000 for joint filers). However, if the heirs subsequently meet the two-out-of-five-year ownership and use requirements, the exclusion becomes available.

Tip: Prior to transferring interest in your home to anyone (including a trust or an estate), understand the impact of this action on the tax-free home gain exclusion.
Like-kind exchanges.Often, instead of selling business or investment property, an owner may trade for another, similar property hoping to either defer or avoid taxable gains. Under recent legislation, tax-free exchanges of like-kind properties are eliminated, except for qualified real estate transactions. Tax is generally deferred until the replacement property is sold, but the tax law imposes a two-year holding requirement on the parties to the deal. Alternatively, you may qualify under a special exception, such as proving tax avoidance wasn’t the purpose of the sale.

Tip: Related property transactions of this type can get complicated. Ask for a review of your situation before trading any property.

To discuss the specifics of a property sale to one of your family members, please call us at 203-468-8133.

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Make Setting Salaries Easier With These 5 Steps

Post Date:

July 8, 2019

Whether you are hiring for the first time, filling an open position, or conducting annual performance reviews, finding a salary range that attracts and retains valued employees can be a difficult task. Here are some suggestions to help make the process a bit easier for you and your practice:

Know what your practice can afford. Like any business expense, you need to know how it will affect your budget and cash flow. Make a twelve-month profitability and cash forecast and then plug in the high end of the annual salary range you are considering to see if it’s something your practice can absorb. After all, the greatest employee in the world can’t help you if you don’t have the money to pay them. Don’t forget to account for increases in benefit costs, especially the escalating cost to provide healthcare. Once you establish a budget, you can allocate your spending plan to your payroll.
Understand the laws. In general, the federal government sets the minimum requirements (minimum wage of $7.25 per hour, overtime rules and record keeping requirements). States and localities often add their own set of rules. For example, the state of Illinois, Cook County and the city of Chicago all have different minimum wage requirements. If you are located in Chicago you need to adhere to the highest rate. So research all payroll rules that apply to your location at the beginning of the process. When reviewing the rules, don’t forget that different rules often apply depending on the number of employees in your business.
Review and update job descriptions. Take some time to review key jobs and update them as appropriate. With new positions, note the exact tasks and responsibilities you envision for the role. Then, think about the type of person that will succeed performing these responsibilities. Once you have a clear picture of who you are looking for, you can begin to build a detailed job description and narrow in on a specific salary range.
Establish value ranges and apply them. Value is key when determining the perfect salary amount. Define the range of value for the position and then apply that valuation to the current person’s performance within the defined pay range. Use websites and recruiters to establish the correct range of pay, then apply experience and employee performance to obtain a potential new salary amount. Remember, size of company, location and competitiveness of the job market are all factors to consider.
Factor in company benefits. A strong suite of employee benefits is a powerful tool to couple with a competitive salary. Don’t be afraid to communicate their value to prospective and current employees (they help with retention, too!). According to Glassdoor, health and dental insurance are the most important, but flexibility is close behind - over 80 percent of job seekers take flexible hours, vacation time and work-from-home options into consideration before accepting a position.

Finding the right salary can be tricky, but with some preparation and research, you can find the balance that satisfies the needs of your practice and your employees.

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U.S. Pet Doctors Steel Themselves for Online Pharmacy Challenge

Post Date:

June 16, 2019

Gary I. Glassman, CPA, is quoted in this Reuters article about the distribution of revenue in veterinary practices.

https://www.reuters.com/article/usa-healthcare-pets/u-s-pet-doctors-steel-themselves-for-online-pharmacy-challenge-idINKCN1TD139

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4 Key Elements of Great Business Books

Post Date:

May 2, 2019

Your bookkeeping system is the financial heart and lifeblood of your business. When set up and operating properly, your books help you make smart decisions and seamlessly turn your financial data into useful information. Here are four key characteristics to build and maintain a healthy bookkeeping system:

Select the proper accounting method
There are two different methods for recording transactions: cash-basis and accrual-basis. In general, cash-basis records a transaction when payment is made where accrual-basis books the transaction upon delivery of the good or service. Cash-basis is easier to track and a useful option for smaller businesses and sole-proprietors. Where as larger businesses who buy from vendors on account (accounts payable) generally use accrual-basis accounting.
Selecting the proper method affects any related financial transactions and how your financial statements are displayed. A correct approach will also include consideration of outside factors, including: IRS rules (businesses with more than $25 million in gross receipts must use accrual-basis), bank covenants, and industry standards. Once a choice is made, it can be changed but it must be properly reported to the IRS.
Create an account structure that fits the company
Every business has a chart of accounts included in their bookkeeping system. These accounts sort the business’s transaction data into six meaningful groups. They are assets, liabilities, equity, income, cost of goods sold and other expenses. Each group will often have numerous accounts and sub-accounts associated with them.
Having the right mix of accounts created and grouped in an organized fashion will help you properly classify transactions and prepare usable financial statements. The proper account structure for your company will mesh with your specific information needs.
Enter accurate and timely transactions
The value your data provides is dependent on each transaction being recorded correctly and on time. Entering transactions in the wrong account can cause major issues down the road. Financial reporting that is delayed can hide problems that need immediate attention. Some transactions are relatively straightforward, and some are more complex (like payroll, accruals and deferrals).
It’s important to have someone who understands both your business and the accounting rules enter your transactions in a timely fashion. In addition, a good month-end close process that involves reviewing each account, will find mistakes from the initial entries.
Establish financial statements for decision-making
The main financial statements are the income statement (income - expenses = gross profit), the balance sheet (assets = liabilities + equity) and statement of cash flow. Each statement has a specific purpose:
- Income statement. The income statement shows company performance for a select period of time; typically monthly with a full year summary. At the end of each year the income statement restarts.
- Balance sheet. The balance sheet displays a company’s overall health as of a certain date. It is perpetual. This means it doesn’t end until the business is closed or sold. It includes one line that summarizes the current year and prior year results from the income statement.
- Statement of cash flow. This statement summarizes the inflow and outflow of cash. It ensures you know whether you have enough cash and the pattern of your cash position over time.

If properly executed, your bookkeeping system will turn out accurate financial statements that can be used for several tasks - financial reporting, budgeting, forecasting, raising capital, applying for a loan, tax reporting and decision making. Feel free to call with any questions or to discuss bookkeeping solutions for your business.

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Are Faster Write-offs for Business Buildings Possible?

Post Date:

April 28, 2019

Generally, it takes nearly four decades to fully depreciate the cost of a business building. That's a long time in most people's book. But you may be able to recoup the cost of certain components faster with a cost segregation study prepared by an expert.

How tangible personal property can accelerate deductions

Based on the main tax system for depreciation deductions — the Modified Accelerated Cost Recovery System (MACRS) — the usual write-off period for business real estate is 39 years. In contrast, MACRS allows you to write off "tangible personal property" over shorter spans like five, seven or 15 years. For instance, the MACRS period for computers is only five years.

Fortunately, you may not be necessarily stuck with the lengthy 39-year period for the entire building. Cost segregation studies can help taxpayers identify certain building components to be treated like tangible personal property so they can recover their costs over shorter depreciation periods. For example, a restaurant might accelerate hundreds of thousands of dollars in write-offs on a $5 million property.

What sort of components can be identified in a cost segregation study? The list includes, but isn't necessarily limited to, the following:

Electrical installations
Plumbing
Mechanical components
Removable carpeting and partitions
Finishes

Finally, you might be able to accelerate expenses even more by using Section 179 expensing ($1,020,000 for 2019) and 100-percent bonus depreciation for qualified assets. Therefore, a cost segregation study may provide even greater benefits.

But be careful, the IRS has a long history of challenging accelerated deductions. Thankfully, the Audit Techniques guides the IRS agents use for guidance are also available to the public to provide insight into cost segregation choices likely to be accepted.

Call today with questions regarding your situation.

Burzenski and Company, P.C. office@burzenski.com

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Don't Let Disaster Befall Your Favorite Charity

Post Date:

April 12, 2019

A crucial deadline is approaching and you can help!

The filing deadline for most non-profit organizations is May 15. Missing this deadline results in penalties that can devastate the organization's budget, or worse, strip them of their non-profit status and make your donations non-tax deductible! Here's what you can do to help them:

Check the charitable status online.The IRS has a master list of charitable organizations recognized as non-profits in good standing. Here you can see the current status of your favorite charities and even view past tax returns to get an idea of where they stand.
Remind the organization.Many small non-profits, like youth sporting groups and local school booster clubs, often forget to file their annual report because officers are constantly rotating in and out of the organization. Each transition of responsibilities increases the likelihood that important data, like a filing requirement, will get lost. A simple reminder from you might be what they need to get back on track.
Get involved.Learn how the organization operates and see if there is anything you can do to help. Oftentimes, one individual is juggling multiple roles within the organization. Your skill set, whatever it may be, might be exactly what they need to free up someone else to properly handle the annual filings.
Tell them to get help!A simpler filing option may be available to them. If they have less than $50,000 in gross receipts, filing is much less complex with the Form 990-N e-Postcard. Larger organizations must fill out Form 990 or Form 990-EZ.

Take action now! The implications of losing the non-profit status are vast. Please call if your favorite charity needs help filing their non-profit tax return.

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Five Itemized Deductions to Still Consider

Post Date:

March 17, 2019

Beginning in 2018 and lasting though 2025, new tax laws modified or eliminated itemized deductions, while increasing the standard deduction. Here are five valuable deductions still available (albeit altered) to keep in mind as you file your 2018 taxes and plan for your 2019 tax savings:

Medical expenses: The medical deduction threshold is reduced from 10 percent of adjusted gross income (AGI) to 7.5 percent, but only through 2018. Beginning in 2019, it reverts to 10 percent of AGI. Therefore, your 2018 return may be your last shot at a medical deduction.
SALT payments: Like before the big tax law changes, you can deduct state and local tax (SALT) payments for (a) property taxes and (b) income or sales taxes. For 2018 through 2025, however, the annual SALT deduction can't exceed $10,000.
Charitable donations: Generally, the deduction for charitable donations is preserved, while the annual limit on monetary contributions rises from 50 percent of AGI to 60 percent. But other new law changes make tax breaks for charitable gift-giving more tricky. Accordingly, you might bunch charitable donations in 2019 (combine 2-3 years worth of donations into one year) if it suits your needs.
Interest expenses: The threshold for deducting mortgage interest on acquisition debt has been lowered from $1 million to $750,000 for loans after Dec. 15, 2017. But prior debts are grandfathered. Also, you can no longer deduct mortgage interest on home equity debt unless it was used to buy, build or substantially improve your home that secures the loan. Finally, investment interest expenses are still deductible up to net investment income.
Casualty losses: The deduction for casualty and theft losses is suspended for 2018 through 2025, except for losses in a federally declared disaster area. Therefore, catastrophe victims may salvage a 2018 deduction, subject to the usual 10 percent-of-AGI floor. For disaster-area losses in 2019, you can elect to claim the loss on your 2018 return.

Notably, the new law also eliminates the deduction for miscellaneous expenses, in addition to the other changes. But on the positive side, itemized deductions are no longer reduced for high-income taxpayers.

Burzenski and Company, P.C. office@burzenski.com

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Use your Tax Refund for an IRA contribution

Post Date:

February 1, 2019

You may already know that contributions to a traditional IRA may be deductible on your personal tax return (subject to certain limits). You're allowed to deduct a contribution on your 2018 return that is made as late as April 15.

But are you aware that you can use this year's tax refund to make your IRA contribution for the 2018 tax year?

How to fund your IRA with a refund

The IRS says it's OK to use this year's tax refund to make your 2018 IRA contribution as long as you meet the April 15 deadline. If you want to use this strategy, however, you'll want to file your tax return early.

Here's how it works: You can contribute up to $5,500 to a traditional IRA for 2018 ($6,500 if you're age 50 or older). All you have to do is claim the IRA contribution on your 2018 return and then ensure the same amount is deposited in your IRA by April 15.

The ability to deduct contributions is phased out if you (or your spouse) actively participate in an employer's retirement plan, and your income exceeds a certain level. For instance, the deduction is gradually reduced for a single filer with a modified adjusted gross income (MAGI) between $63,000 and $73,000 on a 2018 return. Further calculations to determine your maximum contribution amount will be needed if your income falls inside a phaseout range.

The IRA refund strategy is especially beneficial for taxpayers who are struggling to make ends meet, but still want to save for retirement

Extensions are not allowed for IRA contributions, so don't procrastinate! Typically you can file your tax return starting as early as late January.

Burzenski and Company, P.C. office@burzenski.com

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Employee Expense Rules Have Changed

Post Date:

January 20, 2019

Employee Expense Rules Have Changed

One of the things that’s going away under the new tax reform laws implemented this year is an employee’s ability to deduct unreimbursed expenses related to their job.

Farewell to miscellaneous itemized deductions

The deduction for unreimbursed employee expenses was among the qualified 2-percent miscellaneous itemized deductions that were eliminated by the Tax Cuts and Jobs Act (TCJA) passed in late 2017. This could be a blow for employees who had relied on it to deduct unreimbursed expenses for such things as work-related meals, entertainment, gifts, lodging, tools, supplies, professional dues, licensing fees, work clothes and work-related education.

A win-win solution

If you are an employee who has used this tax deduction, here are some tips to minimize its loss:

Determine the impact. Review your past tax records to help estimate how much you expect to pay in unreimbursed work expenses and what the tax deduction was worth to you.
Discuss the situation with your employer. If the loss of this deduction is a hardship, talk to your employer about how you will be affected.
The win-win. Ask your employer to consider reimbursing you for your work-related expenses directly. Your employer can probably deduct those expenses from their business return without increasing your taxable income. This will save them tax dollars when compared with the cost of raising your pay in order to indirectly compensate you for your unreimbursed expenses.

If you are an employer, consider talking to your employees about their unreimbursed expenses now that the tax laws have changed. If you wish to reimburse their qualified business expenses, make sure your reporting adheres to IRS accountable plan rules so that your reimbursements are deductible as a business expense and do not add to your employees' incomes.

Call us with any questions related to employee expense rules at 203-468-8133. office@burzenski.com

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