mrice

Save money with high deductible medical plans

May 15, 2012 by mrice

How High Deductible Medical Plans Save Money

If you’re like most employers, you’ve been squeezed by increasing premiums for health care benefits for yourself and your employees. Chances are, you’re on the lookout for ways to control those escalating health care costs while still providing your workers with the quality coverage for catastrophic care they need for themselves and their families.

That’s where a HDHP/HSA plan comes in.

HDHP/HSA Basics

HDHP/HSA stands for “high deductible health plan/health savings account,” an increasingly popular option among employers. In fact, about 17 percent of all employers have moved to offering HDHP/HSA plans for their employees in order to save money on health insurance premiums. Here’s how it works:

A high-deductible health plan saves on insurance premiums by having employees pick up more of the cost of routine medical care and small emergencies. Since truly major medical events are still comparatively few and far between, a higher deductible goes a long way to helping to control insurance premiums for workers and their employers. Currently, the law requires these plans to set minimum annual deductibles of $1,200 for individual plans, and $2,400 for family plans.

Contributing to an HSA

To help offset the burden of higher deductibles, though, the law also allows those who have a qualified HDHP to contribute pre-tax dollars to a health savings account. Any contributions grow tax free, and can be withdrawn tax free to pay for qualified medical expenses. The catch: Any withdrawals for any purpose other than to pay for qualified medical expenses are subject to income tax and a penalty of 20 percent.

As an employer, you can also match your employee contributions to their own HSA. As of 2012, covered individuals can contribute up to $3,100 for individual plans or $6,250 for family plans each year. though a 20 percent penalty, plus income taxes, applies to withdrawals for any other purpose.

Qualifying

Not everyone can qualify for an HSA. To contribute, you must first own or be covered by an HDHP. You cannot qualify for an HDHP, however, if you also qualify for a traditional major medical plan.

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TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.

Put it in writing!

May 10, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

The Importance of Written Agreements

While a gentleman’s agreement might be good in theory, generally it is best to avoid this type of agreement as a business owner. Friendship is wonderful, but business is business. Business owners who operate without written agreements may find themselves at substantial risk.

Clarifying Expectations

When you enter into an agreement to provide services, a written agreement serves as a model for defining the responsibilities of each party. Without a written agreement, if a dispute arises, you may find yourself providing services that are beyond your original expectations. Let’s face it, time is money and if you have to spend additional time providing unexpected services, it may cost you significantly.

Payment Expectations

Written contracts leave no room for error on payments. When an agreement is verbal, there may be disputes regarding when payments are made and how much those payments are. Removing any doubt about payment is a crucial component of a well-written small business contract. A written contract also means that if a dispute about payment arises, you have recourse through legal channels.

Disagreements Cause Losses

When you fail to have a written contract with a client or provider, you stand a greater risk of losing time and money. Not only will you find yourself in a “but I said…” situation, you may not have any opportunity to recoup funds that are due to you.

Small business owners should think carefully about accepting any client without a written agreement. While it may initially seem that a handshake is all that is needed to secure the deal, problems may occur later that will cause deep regret. Work with your clients closely, establish a firm policy of working with a written contract and spell out all of the details of your agreement. Should any disagreements occur after the signing of a contract, you will have a written document that proves what everyone agreed to originally.

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Tracking bills in Quickbooks is worth the effort!

May 5, 2012 by mrice

Tracking Bills in QuickBooks, Worth the Effort

Next to payroll, paying bills is probably your least favorite task in QuickBooks. You don’t have to use this feature – you can keep stacking bills on your desk, scrawling the due dates on a paper calendar, and writing checks.

If you’re still operating this way, though, you’re missing out on the numerous tools that QuickBooks offers to track your accounts payable, including the ability to:

Enter bills as they come in

Set reminders for bills due

Pay bills easily

Locate a bill or payment quickly

Enter bills as (or after) you receive items

Link bills to purchase orders

Have instant access to a bill’s status

Settling your debts

It’s good to set reminders for bills. Go to Edit | Preferences and click Reminders. Make sure that that Show Reminders List… box is checked, then click Company Preferences. Find the Bills to Pay row and enter the advance notice you’d like. Indicate whether you want to see a list or a summary, then click OK.

When bills are due, click the Pay Bills icon or select Vendors | Pay Bills. A window opens displaying all outstanding bills. You can pare this down by selecting a date in the Due on or before field and filtering by vendors.

You can easily select the bills you want to pay.

Enter a check mark next to the bills you’re paying, and change the amount in the Amt. To Pay field at the end of the row if necessary. At the bottom of the screen, you can set the payment date and type, use any discounts or credits, and make sure the correct payment account is selected. When you’re done, click Pay Selected Bills.

Tip: You can have credits and discounts automatically applied by going to Edit | Preferences | Bills.

After You’ve Paid Up

There are a number of places where your bills appear in QuickBooks, including:

The Unpaid Bills Detail report

The A/P Aging Detail report

The Vendor Center

QuickReports

In the Recent Transactions pane of some forms

On the bills themselves

You can just pay bills by using Banking | Write Checks or Enter Credit Card Charges. But the payoff for tracking bills is instant access to your accounts payable status, better relations with vendors, and a more insightful accounting of your company.

Personal guarantees, should you or shouldn’t you?

April 29, 2012 by mrice

Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.

Personal guarantees: should you sign?

Forming a corporation or a limited liability company is one of the smartest things you can do to protect your personal assets. In general, if a company can’t pay its bills, its creditors can’t force the company’s owner to pay its bills — unless the company’s owner has signed a personal guarantee.

Signing a personal guarantee is like co-signing a business loan. A personal guarantee is a legally binding promise to repay a business debt from your own personal funds if your company is unable to pay it. Signing a personal guarantee means that, when it comes to the creditor on the guarantee, you cannot rely on the fact that your business is an LLC or a corporation to avoid paying that creditor. In some ways, a personal guarantee undoes the protections that you put in place when you set up your business as a corporation or an LLC.

If your business defaults on a loan that you personally guaranteed, your personal assets may be at risk. A creditor can sue you personally for the company’s outstanding debt. If you lose, the court can enter judgment against you personally, and your bank accounts — even joint accounts — may be levied, your wages may be garnished and your property may be seized. Retirement accounts, Social Security income and disability income are usually safe, but other assets are not.

A personal guarantee is so risky, you may wonder why any small business owner would sign one. The answer is simple: many lenders require them. Lenders understand the risks of doing business with a corporation or LLC, so they often require one or more of the major shareholders in a business to personally guarantee a loan, a line of credit or charge account. Small business owners have no choice but to sign a personal guarantee if they need to borrow operating capital or order inventory or other goods on credit.

Small business owners should understand the risks of signing a personal guarantee and make an informed decision before signing. A personal guarantee may be unavoidable if a business owner needs to buy goods or services on credit.

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BEWARE- Intuit Tax ID Scam

February 7, 2012 by mrice

With tax season here, tax scams are here too! And of course theyare online! The latest tax-related scams out there is spreading via email.

The emails claim to be from Intuit ( security@intuit.com) with a subject header that says something sorta like “Urgent update of tax information is requested” or “Tax information required within 30 days.” It may look like this:

Dear Account Holder,

In our continuing effort to guarantee that exact data is being sustained on our systems, as well as to provide you better quality of service; INTUIT INC. has participated in the Internal Revenue Service [IRS] Name and TIN Matching Program.

We have discovered, that your name and/or Taxpayer Identification Number, that is stated on your account does not correspond to the data on file with the Social Security Administration.

In order to check the data on your account, please click here.

Regards,
INTUIT INC.

Corporate Headquarters
2632 Marine Way
Mountain View, CA 94043

There are a few variations on this but the idea is that they want you to confirm your tax identification number. Don’t. Don’t even think about it. Don’t click on any links and don’t give out your personal information. Period. The link likely contains a virus.

The emails that came our way were from an address in marked as “an abusable web server” by spam filters. The address was also flagged by Barracuda Reputation System, and is listed on the Barracuda Reputation Block List, a free DNSBL of IP addresses known to send spam.

If you get one of these, best to delete it. If you’re not sure, you can forward any suspicious emails purporting to be from Intuit to the company directly via spoof@intuit.com.

(Author’s update: I contacted the folks at Intuit who advised that you can find out more about these scams through their corporate security web site, security.intuit.com.

“One more Chance!” The IRS does it too

January 18, 2012 by mrice

As a parent, I have, on more than one occassion, painted myself in a cornor by giving one of my kids just one more chance. Inevitably they have called my bluff. So then its decision time, offer one last chance (my wife calls this picking your battles) or pull the trigger on some draconian punishment, such as “20 minutes in your room” or “no DS”, etc, etc. Well, it is comforting to know that the IRS does this too. Especially to taxpayers with offshore assets.

In early 2011 the IRS Commissioner announced the Offshore Voluntary Disclosure Initiative (OVDI), saying:

“As we continue to amass more information and pursue more people internationally, the risk to individuals hiding assets offshore is increasing. This new effort gives those hiding money in foreign accounts a tough, fair way to resolve their tax problems once and for all. And it gives people a chance to come in before we find them.” (emphasis added)

It is VERY INTERESTING to note that this is the THIRD program of its type. How many times can you dangle to the carrot and offer some level of amnesty? Well, as the previous programs brought in over 4 BILLION dollars in revenue with very little taxpayer cost, I guess you don’t fix what ain’t broke!