Friday, March 30, 2012

2011 Business Taxes Add Complexity

Still scrambling to prepare your 2011 taxes? One thing you don't have to worry about is a lot of changes in the income tax code for businesses. It was a fairly quiet year.

 The biggest news, of course, was the introduction of the 1099-K form. This must be filed by payment settlement entities, which are financial institutions that issue credit cards, as well as third-party payment processors like PayPal.

 If you accept payment using one of these entities and have processed $20,000 or more and at least 200 transactions in 2011, you should have received one, or will soon, and you must file it with your taxes like you would any other 1099.

Several forms and schedules have been altered to accommodate this. Only gross amounts will be reported, so you need to have an easy way to track transactions that could affect this total (like chargebacks).

 Other changes? A few, including:

  • The 1099-B has changed. Brokers are now required to report the basis for transactions, which you'll enter on the new Form 8949 rather than on the Schedule D.
  • The New Hire Retention Credit may affect some of your employees, if they've been kept on for at least 52 weeks. You would get $1,000 or 6.2 % of the newly-retained employee's wages for that year, whichever is less.
  • The upper limit for the Section 179 deduction is $500,00 for the 2011 tax year. It goes down again for 2012.

You may be too mired in 2011 taxes to even think about your 2012 obligations. But you'd be wise to start thinking about them now. Year-round tax planning will minimize the drama of those dreaded IRS deadlines. Congress will undoubtedly be busy throughout 2012 and beyond, tweaking the tax code. So talk to us about making smarter tax-related business decisions in 2012.

Beth Bockenhauer is the owner of Beth Bockenhauer, CPA, a boutique accounting and CPA practice based in southern California. She started her career with five years of military service. She then worked for ten years as a small business owner, and holds a Bachelor of Science degree in accounting. Beth has worked in public accounting for the past seven years. For more information, visit www.bethbcpa.com

Small Business Procurement Expo April 20th

On April 20, 2012 Assembly Member Wilmer Amina Carter, in conjunction with ADF Networking Consultancy, Inc. and the California Public Utilities Commission will present the Inland Empire Small Business Spring Procurement Expo at the San Bernardino Hilton Hotel located at 285 E. Hospitality Lane, San Bernardino. The Expo is FREE of charge to all small and diverse business participants.


RSVP by April 16, 2012 to secure a matchmaking appointment. Registration includes complimentary continental breakfast, admission to the business matchmaking session, all presentations, exhibits, and workshops. To RSVP, contact Sheila Futch at (909) 820-5008, or email: sheila.futch@asm.ca.gov, or visit www.adfnetworkconsulting.com/expo.





Tuesday, February 28, 2012

Synchronization: The Key to Business Success

Your business operates much like the human body.  It is an integrated, interdependent whole that needs all of its functions working in tandem to make you healthy and fit.  Yet, most businesses today operate as though each segment of its operations were an independent organism, with its own goals, processes and results, many times leading a company to failure.

Recently, I was talking with a major corporation lamenting that they were implementing all types of programs to grow their business, yet were having dismal results.  While they were aware that its units were operating as silos, they felt they were taking steps to improve that situation. 



Training was the focus that would turnaround the company’s mindset.  Marketing had created a series of multi-media presentations on all their products and were put online so each employee could view them at their convenience.  Compliance, following in their steps, purchased a webinar series for different segments of the firm to ensure everyone understood the issues in their highly volatile environments.  Training was at the forefront of the company’s mission and vision for the organization.

So why wasn’t it working?  Nothing was really changing and no one knew why.  We decided to investigate and decided that we needed to get input from all levels in the organization, especially those on the front lines.

It was decided that a series of informal meetings would be held, with the goals of determining what was limiting the company from growing.  They were set up outside the office as breakfast meetings, with representatives from the various departments.  A very likable, approachable and respected member of the senior staff was coordinating the meeting, and started the meeting with “we need your help, your insight and your suggestions on any and all topics that may be an impediment to our growth.”

When the issue of not understanding the full range of products and services arose, the marketing department asked why their multi-media presentations were not helping.  The answer—about 75% of the audience stated that their computers did not have sound, so no one could listen to any training created or any webinars offered outside the firm.  After investigating it was found that over 80% of the company’s computers did not have sound cards.

This was only one of many issues that were brought up at the meeting that showed that programs were not coordinated, departments were not working together and feedback was not part of any program.

Many companies have lost, or may not have developed, the ability to look at the entire organization as a comprehensive whole.  The focus over the years has been to segment—to look at each function of the organization as a separate entity.  The end result is a company consisting of silos---all with their own goals, processes and even cultures.

The amount of resources that are squandered by not synchronizing operations is extraordinary.  The Standish Group does a report called the Chaos Chronicles which is based on 8,380 projects with 365 respondents.  In that report it was stated that only 34% of projects are successfully completed, 51% were challenged (failed to meet schedule, budget or target scope) and 15% totally abandoned.

How well does your company synchronize operations? And what could your company achieve if you synchronized all functions more effectively?  Think about what that would mean to your bottom line.



Diane Weklar is the president of The Weklar Consulting Group.  She is an expert in synchronizing marketing and business operations to accelerate company growth.  For more information, contact Diane@Weklar.com.

Tuesday, January 31, 2012

You, Your Business and Tax Law Changes

The transition from 2011 to 2013 promises to be a rocky one in the tax world, as we move through the 2012 election year with a extremely partisan debate over the future course of the federal tax system and federal budget in general.  With expiring tax provisions, new health care taxes, and estate taxes back, tax planning is highly advisable.  Here are some of the changes to be on the lookout for:

The New Hire Retention Credit was originally created as an incentive to hire unemployed workers in 2010.  Now it is to help retain the newly-hired employees for whom the hiring exemption was claimed in 2010. The new credit is allowed for such employees who remain an employee for 52 consecutive weeks.  The credit is the lesser of $1,000 or 6.2% of wages paid by the employer to the retained qualified employee.

Congress has repealed the 3% withholding requirement that was scheduled to take effect in 2013 for all payments to government contractors providing property or services to a federal or state/local government agency.  In addition, the new law extends and expands the Work Opportunity Tax Credit (WOTC) applicable to qualified veterans.  This credit applies to any veteran who served for more than 180 days. 

An employer may offer his employees a “simple cafeteria plan” for the years after 12/31/10. Such plans are granted a safe harbor for meeting non-discrimation rules that generally apply to cafeteria plans.  Remember, cafeteria plans are not available to partners, LLC members or sole proprietors.  Nor can they be offered to S corporation shareholders owning over 2% of the company.

Employers will be required to disclose the value of the employee’s health insurance coverage sponsored by the employer, starting with the 2012 W-2s. 

The American Recovery & Reinvestment Act temporarily shorted the built-in gains tax waiting period for corporations that switch from a C to S status to 7 years from 10 years.  The new law, changes the waiting period even further, providing that no BIG tax is owed on built-in-gains recognized in tax years beginning in 2011, if certain provisions are met.

100% bonus depreciation remains in effect for 2011, but drops to 50% in 2012 and is scheduled to disappear altogether in 2013, with an exception for certain “long-lived” property.

Maximum section 179 expense (for fixed assets) drops in 2011 to $139,000 (from $500,000), futher dropping to $25,000 for tax years beginning after 2012. 

For decedents dying in 2010 and 2011, the estate tax applicable exclusion amount is $5 million.  For deaths in 2012, the applicable exclusion is inflation adjusted to $5,120,000, with the maximum estate tax rate being 35%.  In 2013 and beyond, the transfer tax is scheduled to return giving us a top rate of 55% plus 5% for certain estates, and a $1 million exemption.

Phoebe Vausher-Frankeberger is a partner with Frankeberger Vausher + Company, CPAs which is located in Chino Hills.  She can be reached at 909-597-1100 or at PhoebeF@FVCPAs.com