An accountable plan is an arrangement that lets you reimburse your employees for expenses incurred on behalf of your company, such as driving to the post office or supply store. With a properly administered plan, you can deduct the reimbursements on your business tax return, yet the payments are not considered income to your employees.

How can you make sure your plan qualifies?

• First, the reimbursements must be for allowable business expenses. For instance, you can repay employees for hotel and other travel expenses when traveling to a trade convention.

• Second, your employees need to keep records of the expenses, and provide those records to you.

• Third, if you pay or advance your employees more than the amounts spent on business items, the extra must be returned, generally within 120 days. Amounts not returned to you are income to your employee, and are subject to payroll taxes.

The requirements are applied to each employee, and you can have more than one plan.

Contact us to discuss your policies for repaying employees’ business expenses. We’ll help you make your plan accountable.

Though it may be small consolation, you’re not alone. Tax identity theft topped the IRS list of tax scams for 2013. Here’s what you need to know if it happens to you.

• What to do. File Form 14039 with the IRS. The “Identity Theft Affidavit” starts the process of notifying the IRS that you are a victim or potential victim of tax-related fraud. You’ll need to include proof of your identity, such as a photocopy of your driver’s license or passport.

  In addition, file a report with your local police department. Under the recently expanded Law Enforcement Assistance Program, you can complete a special form allowing the IRS to release a copy of the fraudulent tax return that was submitted under your social security number.

  Who else to notify: the Federal Trade Commission, the Social Security Administration, your bank, and the national credit bureaus.

• What to expect. Once you file Form 14039 and validate your identity, you may receive an identity protection personal identification number. That number will allow you to file your tax return and receive your refund. However, be aware that straightening out your tax account can take a year or longer.

We’re here to help you safeguard your financial identity. Call for more information, as well as assistance with IRS correspondence.

Proceed with caution! Although rapid expansion may provide opportunities for increased profitability, growth is also fraught with hazards. Not a few companies have crashed and burned because they plunged into new markets or acquired existing businesses without adequate forethought. If your company is mulling over expansion, consider the following:

• Know your priorities. A firm should never lose sight of its core mission. Be slow to expand into products that, on the surface, seem similar but may actually take your firm in a different direction. If your company manufactures furniture, should you really buy a firm that produces airplane parts?

• Know your investors. Some companies have established hand-shake agreements with investors, then spent thousands of dollars only to learn that financing was not forthcoming. Make sure you have adequate recourse should needed funds fail to materialize.

• Partner wisely. For example, seek other firms that can assist with larger-than-expected orders. To prevent backlogs and problems with quality, scrutinize the capacity of your suppliers.

• Acquire carefully. If in doubt about any aspect of the business you’re considering for acquisition, seek expert advice. “Winging it” is a sure recipe for disaster.

• Plan for growth. Many aspects of your business may be affected by expansion, including accounting systems, organizational structure, inventory management, and sales. Be sure to examine every major system and function to determine how they can be integrated into a larger entity.

• Monitor growth. As your business expands, always keep a watchful eye on your firm’s financial status and progress. Don’t wait until the end of the quarter to discover that cash flow has dried up.

• Keep existing customers happy. A popular restaurant, for example, that expands too rapidly and fails to maintain quality may find itself losing customers to the eatery across the street. Remember, it’s generally harder to attract customers than to keep them.

In this digital world it is easy to let phone etiquette slip through the cracks…phones? They’re always with us and often ring at the most inconvenient of times.

“Most of your marketing expenditure is encouraging people to call.”

So it makes sense to have a system in place to convert those calls into sales. And a voice through the phone can be almost as effective as an in-person meeting and can never be replaced by an email or text.

Train your team to focus on their telephone manner and watch this underutilized skill pull in the results.

Start with a smile. No, literally! Putting on a smile before answering the phone automatically changes the tone of the voice and avoids sounding grumpy or too busy from the get-go.

Make it a mission to answer ON the second ring. Challenge your team members, create an incentive to have them push harder to get to the phone faster.

The client will feel important to the business (which they are), starting things off on a positive note.

Give an immediate timely greeting (good morning, afternoon, etc.) and introduction. Letting the client know immediately that they have reached the person/place they are looking for creates the right dynamic for a positive interaction.

Provide your full name, each and every time. It creates a sense of authority. “First name, speaking” suggests there may be someone else the caller would like to speak to. The caller can clearly hear you are speaking, they don’t need to be reminded that you are.

Be pleasant, engage in the obligatory small talk when necessary but always try to keep things brief (without sounding impatient). Brevity combined with politeness is most effective in showing the client their time is valuable.

Think before shooting off an automatic response. If the person the caller is after is not in, ask if there is something you can do in the meantime.

“X is out to lunch, X is on holiday and can I take a message” are not useful responses for your customer, who most likely expects their needs to be addressed immediately.

End the call by offering additional help or information. Asking if there is anything else you can do or offering a solid means of follow-up implies that the listener has been attentive, knowledgeable and reliable – Reflecting your brand.

Another reason: Additional rate changes take effect this year. For example, the maximum long-term capital gain rate increased to 20% when your income puts you in the highest ordinary income tax bracket. In addition, a 3.8% surtax may apply to net investment income — a term that includes interest, dividends, and capital gains — when your modified adjusted gross income (AGI) exceeds $250,000 ($200,000 if you’re single).

Sorting inflows into various categories such as wages, investments, retirement plan distributions, passive income, and active business income gives you a clearer picture of what tax rules will apply.

For instance, this year you’ll pay an additional 0.9% Medicare tax on wages and self-employment income when the combined total of those items exceeds $250,000 on a joint return ($200,000 when you’re filing as single).

This tax is separate from, and based on a different type of income than the 3.8% net investment income tax. Depending on the sources of your income, you may be subject to both taxes.

• Planning suggestion 1: Investigate pre-tax fringe benefit options. The 0.9% additional tax is assessed on wages subject to Medicare tax. Health insurance premiums paid under your employer’s cafeteria plan are exempt from Medicare tax, as are contributions made by your employer to qualified retirement plans.
• Planning suggestion 2: Switch taxable investments — especially those with a built-in loss — to municipal bonds. Tax-exempt interest is not considered net investment income when calculating the 3.8% tax.
• Planning suggestion 3: Place income-generating investments in retirement accounts. Future withdrawals can increase your adjusted gross income, but are not themselves subject to the net investment income tax.
• Planning suggestion 4: Make tax-free distributions from your traditional IRA to qualified charities when you’re over age 70½. This provision was extended through the end of 2013.
• Planning suggestion 5: Increase the amount of time you actively participate in rental real estate activities, and evaluate the effect of grouping your properties in order to combine the time spent managing them.
• Planning suggestion 6: Evaluate the legal form of your business. Flow-through income from an S corporation in which you actively participate is not generally subject to either of the new taxes. Also, depending on your personal tax rate, you may want to take another look at converting to C corporation status.

The standard form that’s used at closing is called the “HUD-1″ (also known as the settlement or closing statement). A few years ago the GFE was incorporated into the HUD-1, so now it’s easier to compare the estimated costs at the beginning of the process to the lender’s actual charges at the back end.

Setting up a home loan typically runs thousands of dollars, and mortgage payments often represent a huge slice of the family budget. So it pays to shop around and take a hard look at the processing fees. Here are some of the charges you may encounter on the HUD-1 settlement statement:

• Loan origination fee. Generally expressed as a percentage of the loan amount, this fee covers the lender’s cost to evaluate and prepare your loan. Percentages vary among financial institutions, so this is a good candidate for comparison shopping.

• Title search and insurance. This is a legitimate charge for searching property records to establish legal ownership and identify outstanding liens. Charges for this service also vary, so be sure to compare lenders.

• Application fee. Even if your loan is denied, you’ll be charged this fee. It’s intended to weed out folks who are just “kicking the tires.” Watch out for the same fee being charged more than once. It may be called an “underwriting fee” on one part of the statement and a “processing fee” further down the page.

• Document preparation fee. This fee is charged for drawing up legal documents. Again, make sure you aren’t charged twice for this service: once by the lender and again by the escrow agent.

• Appraisal fee. If your property was recently appraised, a lender may be persuaded to waive this charge.

• Inspection fee. This charge covers the lender’s cost to have the property inspected. Your job? Make sure the home was actually inspected. If it wasn’t, why should you pay for an inspection?

• If your refund is less than you anticipated, part of the overpayment may have been applied to other debt such as student loans or state income taxes. You’ll get a notice in the mail from the IRS explaining the difference and providing the contact information for the agency to which the money was sent.Other reasons for a smaller-than-expected refund include math errors, misapplied estimated tax payments, and corrections to tax credits.

• If your refund is more than the amount on your tax return, wait before spending it. The extra money could be due to an error caught by the IRS, which means you’ll get a notice. If the adjustment is correct, the cash is yours to keep.If not, the overpayment could be the result of a mistake on someone else’s tax return, such as an incorrect bank routing or account number. In that case, you’ll need to contact your bank and the IRS to return the money to the rightful owner.

• If your refund is delayed or missing, verify the direct deposit information on your return for errors. Generally, when your bank is unable to match the account number, the refund is rejected and the IRS issues a paper check.What if your direct deposit went into someone else’s bank account? Contact us immediately. We’ll work with you and your bank to trace the funds and get your money.

Do you have other questions about your refund? Give us a call. We’re here to help.

Following are three of the most common hiring mistakes made by start-up companies. Avoid these blunders and you’ll be well on your way to building a productive team.

• Staffing the firm with friends and family. While this strategy may work in some circumstances, hiring pals and relatives often spells trouble. For one thing, friends and family members often expect — even subconsciously — to be treated differently from other employees. Such a double standard, whether real or perceived, can hurt morale and productivity. As a general rule, hiring decisions should focus solely on the needs of the firm and applicant qualifications.

• Trusting in a handshake. Memories fade. Expectations fluctuate. As with other important aspects of your business, employee arrangements should be laid out in clearly written documents. This can be as simple as drafting employee offer letters that cover compensation, rights to intellectual property, and bonus arrangements. Employee handbooks are also a good way to spell out the responsibilities of the firm and its staff. Many a business has been injured by a disgruntled employee who claims the firm did him wrong. Without a written contract or other document laying out company and employee responsibilities, the firm may have no legal recourse against such claims.

• Bringing in a partner for the wrong reasons. Sure, you might save money in the short term by selling a portion of your firm to a partner. But think long and hard about the downside risks. Do you really need to surrender a portion of your company — including control over important management decisions — to someone else? What will this partner contribute? Can you find other ways to fill gaps in your team? Remember, a bad partnership may end up in the business equivalent of divorce court. So choose wisely.

For assistance with any of the issues facing your start-up business, give us a call.

Strengths, Weaknesses, Opportunities, Threats

Think of the SWOT as a yearly medical check-up: blood tests, chest exams and measuring cholesterol levels help identify the areas that need attention and those that are trucking along healthfully.

Strengths and weaknesses are controllable variables- you can influence and change them. Opportunities and threats represent variables that are out of your direct control.

Together they work to identify the best way forward – that will best align your resources and capabilities to ensure the best chance of a thriving firm.

 Start with identifying strengths. These can be internal, procedural, operational, personnel or team related, tangible or intangible. Strengths are the driving qualities that allow the business’ mission to be carried out.

Strengths should reflect the areas in which your business is most successful and can therefore be leveraged to achieve your objectives.

“SWOT provides security, stability and early detection of problems.”

Conversely, weaknesses are the qualities standing in the way of accomplishing goals and achieving success. Weaknesses are a liability that may continue to build roadblocks on the path to success. They should be minimized or eliminated.

Opportunities can be tricky- learning how to recognize them and deciding which opportunities may prove the most profitable is a critical aspect of moving your business forward. Opportunities may show themselves in the form of competition, industry, the marketplace or even technology.  

Threats endanger the stability and survival of a business. Much like a family history of heart disease can act as an early detection tool, recognizing threats early on is the most effective way of tackling them.

The SWOT analysis is best used as a guide, not a direct prescription. It can provide security and stability and provide early detection of developing problems to allow them to be tackled immediately. Long term, the SWOT analysis is what will keep the business’ heart beating.

By the way, we use a tried and tested process to cost-effectively complete a SWOT analysis with you.