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Understanding the Small Business Health Care Tax Creditisplogo_premreseller

The Affordable Care Act includes the small business health care tax credit, which can benefit small employers who provide health coverage for their employees.

The small business health care tax credit benefits employers who:

  • have fewer than 25 full-time equivalent employees
  • pay an average wage of less than $51,600 a year
  • pay at least half of employee health insurance premiums

Here are some facts that will help you understand this tax credit and how it may affect your small business or tax-exempt organization:

  • Credit percentage is 50 percent of employer-paid premiums; for tax-exempt employers, the percentage is 35 percent.
  • Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
  • For 2015, the credit is phased out beginning when average wages equal $25,800 and is fully phased out when average wages exceed $51,600. The average wage phase out is adjusted annually for inflation.
  • Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit.  Transition relief from this requirement is available to certain small employers.

Small employers may still be eligible to claim the tax credit for tax years prior to 2014.   Employers who were eligible to claim this credit for prior years – but did not do so – may consider if they are still eligible to amend prior year returns in order to claim the credit.

Gathering the following information will assist you in completing Form 8941,Credit for Small employer Health Insurance Premiums.

  • SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies
  • Numbers of full-time and part-time employees and numbers of hours worked
  • Average annual wages for employees
  • Employer premiums paid per employee, if applicable
  • Relevant K-1s and other pass-through credit information
  • Cost of coverage for each employee
  • Payroll tax liability – for tax-exempt organizations only
  • Pass-through credit info – for K-1s of other small employers

For more information about the Affordable Care Act visit IRS.gov/aca.

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Five Places to Find More Profits

It’s always a good idea to be on the lookout for ways to increase your profits, and luckily, there are many ways to do that.  One way is to focus on cost-cutting, and here are five places that are good to periodically review for cost-cutting possibilities.

Telephone

Re-negotiating with the phone company every one to two years is a really good idea.  Many telecommunications companies will often bargain with you or offer you a new deal just for checking in with them.

Has your business changed?  Do you need all those extra features you are paying for?  Could you do without those extra lines?  Would another phone plan save you money on long distance or international calls?

The risk is low:  one quick call will let you know if you can save money in this area.  It’s worth it to give it a shot, and while you’re at it, you can call your smartphone provider too.

Travel

Travel is always a great area to look into for possible ways to save.  Are all trips necessary and profitable?  Are there any meetings that can be done virtually instead of face-to-face?  Virtual tools such as GoToMeeting can make travel unnecessary.

What trips can be cut this year?  Can the number of people sent per trip be cut?  Can travel arrangements be made early to save money?  Are booking dates flexible so you can compare and find the lowest rates?  Is a taxi or rent car cheaper?

Dues and Subscriptions

Paying our annual dues for the club or association we’ve belonged to forever may be a habit, but is it beneficial for your business?  We might enjoying seeing everyone once or twice a year at the meeting, but we may not necessarily have to have a membership to do that.  Sometimes paying the guest rate is more affordable than the member rate if we are attending infrequently enough.

Review a list of organizations and publications you and your employees are part of, and choose which ones you are truly benefiting from.   If being an officer in one of your organizations is not getting you any new business, then you may eliminate a time drain by bowing out and letting someone else volunteer.

Labor

As your business grows, it can be a challenge to decide who to hire next.  The first place to look before you decide should be your existing employees.  What tasks are they doing that you are paying them too much for?  For example, do you have a manager doing clerical work?  If so, you may be able to piece together an administrative job that frees your current staff from all the clerical work they are doing.

It’s worth a look to see where your current employees are being overpaid and find someone to do those parts of the job.  You’ll save labor costs and come out ahead in the long run.

Fixed Assets and Equipment

Another place to save money that can be significant is purchases of large items such as furniture, automobiles, and production equipment.  It’s a good idea to get three bids from reputable vendors so you have a choice.  Going with the lowest bid is not always a good move; going for the highest quality is.

Look in these five places, and let us know how much you find to increase your profits.  As always, if we can help, let us know.

Are You Vulnerable to Fraud?

According to the Association of Certified Fraud Examiners (ACFE), over $3.5 trillion is projected to be lost to fraud worldwide in 2011 alone.  The typical organization loses 5 percent of its revenues each year.  While we have a lot to think about as entrepreneurs, we do need to take time to educate ourselves about this unfortunately common business loss.

The Fraud Triangle

An easy way to understand fraud is to learn about the Fraud Triangle.  The creation of the Fraud Triangle is credited to Dr. Donald Cressey, a well-respected criminologist and sociologist who made significant contributions to his field.

Three components need to be present in order for fraud to occur:

  1. Motivation (or Need)
  2. Rationalization
  3. Opportunity

When fewer than three legs of the triangle are present, we can deter fraud.  When all three are present, fraud could occur.

Motivation

Financial pressure at home is an example of when motivation to commit fraud is present.  The fraud perpetrator finds themselves in need of large amounts of cash due to any number of reasons:  poor investments, gambling, a flamboyant lifestyle, family requirements, or social pressure.  In short, the person needs money and lots of it fast.

Rationalization

The person who commits fraud rationalizes the act in their minds:

  • I’m too smart to get caught.
  • I’ll put it back when my luck changes.
  • The big company won’t miss it.
  • I don’t like the person I’m stealing from.
  • I’m entitled to it.

At some point in the process, the person who commits fraud loses their sense of right and wrong and their fear of any consequences.

Opportunity

Here’s where you as a business owner come in.  If there’s a leak in your control processes, then you have created an opportunity for fraud to occur.  People who handle cash, signatory authority on a bank account, or financial records with poor oversight could notice that there is an opportunity for fraud to occur with the ability to cover the act up for some time.

Prevention

Once you understand a little about fraud, prevention is the next step.   To some degree, all three points on the triangle can be controlled; however, most fraud prevention programs focus on the third area the most:  Opportunity.  When you can shut down the opportunity for fraud, then you’ve gone a long way to prevent it.

The Typical Fraud

The median cost of an occupational fraud case was $140,000, according to the ACFE.  It goes undetected for a median time frame of 18 months.   The most likely way to discover fraud is a tip from an employee who works at the victim organization.

Small Business Vulnerability

Small businesses are the most vulnerable to fraud, because they employ the least amount of fraud prevention controls.  Here are just a few quick tips to help prevent fraud in your organization:

  • Create a culture within your organization that deters fraud and provide employees with education about fraud prevention to reduce rationalization.
  • Tighten down access to financial areas, segregate duties, and use other internal control best practices to reduce opportunity.
  • Provide financial literacy programs to employees to reduce need or motivation.
  • The ACFE recommends that small businesses provide employees with an anonymous way to report suspicious activity.

While we hope fraud never happens to you, it makes good sense to take preventative steps to avoid it.  Please give us a call if we can help you in any way.

Five Favorite Freebies You Can Steal

If you’re looking for ways to boost your productivity, technology is a great place to start.  The good news is there are many free options available.  Here are five favorites you might not know about.

1. Bridge lines.

If you need teleconference lines, you’re in luck:  there are many high-quality options that are completely free.  You can have several people, even hundreds, dial into a line and conduct a meeting or training session via the phone.  You can record the session and download the recording as an MP3 file that can be played on an iPod.

Some of the more creative ways to use these free teleconferencing services include:

  •  Staff meetings when someone is absent so they can listen later.
  • Free teleconference, providing tips to all your clients.
  • Free teleconference, allowing prospects to call in and sample what you offer or find out what you’re like to work with.
  • When you need to record anything. (You often need 2 people on the line to be able to record, but not always.)
  • To record a quick training session or how-to that can be distributed later.
  • To have a client record a testimonial you could put on your web site.
  • To record a meditation or therapeutic session you can listen to over and over again.
  • If you’re a coach or trainer, you can record the client training session and give the download as a service perk.

Our favorite:  http://www.freeconferencecallhd.com.

2. FileZilla.

The FileZilla client version allows you to transfer large files between computers that are connected to the Internet using FTP (File Transfer Protocol).  It’s handy for many reasons:

  •  When you need to load large files such as videos or audios to your website
  • When you need to upload something to an artist, a transcriptionist, a warehouse, or other supplier
  • When you have documents such as white papers that you want people to have access to but don’t want to have to keep contacting your webmaster

Download the FileZilla client and find out more here:  http://filezilla-project.org/

3. Gmail.

It’s just a great idea to have a backup email address in addition to the primary email address you use.  Gmail is perfect for this.

Go one productivity-boosting step further, and make your gmail account the one you use for all that email you don’t need to read as frequently.  This could include notifications from social media like Facebook, Twitter, and LinkedIn, blog notifications, list posts, Google alerts, and any other nonproductive email, you don’t need to respond to.

Open your Gmail account less often than your primary email (even once a week if you dare) and gain that productivity boost.  You’ll have freed your inbox from a bunch of clutter and can focus on your clients’ and employees’ emails instead.

Visit this site to find out more:  https://mail.google.com

4. WordPress.

WordPress is free blog software that you can install on your web site or blog site.  Once installed, it’s super-easy to use for both blogging and a website.  You can add photos, graphics, white papers, videos, and audios to the library to put on your blog or your site.

It’s also great for search engine optimization; the search engines love it and will rank you higher when you blog and post fresh content.

Visit http://wordpress.org/ to find out more.

5. Ning.

Ning is a community platform where people can come together and post a profile, participate in discussions, join a group, and interact.  Not all business models will benefit from Ning, but many of you are involved in a club, church group, nonprofit organization, or community where Ning could be very helpful.

Ning is almost free, at $19.95 per year or $2.95 per month, but it’s such an amazing platform, I include it here.  Whenever you’d like to have a private (or public) community of people who are joined by a common interest, Ning can provide that extra online community connection that can help you group interact and bond even more.

Find out more about Ning at http://www.ning.com.

What are your favorite freebies?

Twelve Low-Cost Employee Perks for Fun & High Performance

It’s always a good idea to help employees stay motivated, and there are many things you can do besides the traditional cash bonus.  Here are twelve ideas that cost little yet go a long way with employees, contractors, and other business associates.

1.     Compressed workweek. 

Employees love getting Friday afternoon off, or even a full day a week.  Providing weekday time off cuts absenteeism since the employee has a window to run errands that need to be done during business hours.

 2.     Social activities. 

Create social events that become a tradition in your company.  The employees will look forward to them.  If you’re not sure what to do, consider the hobbies of your employees, plan an event based on a holiday or anniversary, or simply have a meal out.

A business owner who offers training classes can have movie showings in their training rooms complete with popcorn on Wednesday evenings.  The cost of the movie and popcorn is minimal compared to the fun everyone will have.

3.     Telecommute part-time. 

If possible, consider allowing employees to work from home one day a week.  They love the flexibility, often get more done without constant interruptions, and save road time.

4.     Customized recognition.

Every employee likes to be recognized for a job well done, but each may differ in exactly how the recognition is expressed.  Instead of guessing, ask at the time the employee is onboarded whether they prefer gift certificates, time off, sports event tickets, cash, or public recognition.

5.     Bring a child to work.

Last-minute emergencies can come up regarding child care, and the question is whether the employer can help out.  Create a policy around when employees can bring little ones to work.  You might also want to have a list of childcare and/or eldercare referral services handy.

6.     Education. 

Education is always a great perk.  Here are some ideas along those lines:

  • Cross-train employees on job duties other employees do so you have a deeper bench of knowledge to pull from.
  • Consider reimbursing for professional memberships or allowing employees to attend professional association events.
  • Bring in an instructor who can teach self-defense.
  • Have on-site fitness yoga classes.
  • Encourage employees whose first language is not English to take English as a second language or accent reduction classes.
  • Send employees to learn a foreign language.
  • Bring in a teacher for CPR and first aid training.

7.     Stress reduction.

Who isn’t stressed out?  Treat employees to a massage, or bring in an instructor who can teach stress-reduction techniques like meditation.

8.     Casual dress.

On days with no client appointments or perhaps every Friday, offer a casual dress day.  It cuts down on dry cleaning, and employees are more relaxed.

9.     Errand concierge services.

Cut down on absenteeism and long lunch hours by bringing the errands to the employees.  I suspect local businesses would love the business.  Find a nearby dry cleaner that can pick up onsite and maybe even throw in a discount.  Do the same for car wash services, take-home meals from a caterer or local restaurant, prescription refills, postal services, banking, and more.

10.   Transportation.

Offer a subsidy for carpooling, public transit subsidy, or purchasing a hybrid car.

 11.  Discounts on products and services. 

Provide discounts on your services or merchandise for employees.

12.   Time off. 

Offer a creative twist to holiday pay.  Instead of the standard holidays, allow employees to have their birthday or job anniversary as paid time off.  Consider also providing pay while philanthropic employees volunteer their time and talents to nonprofits.

Try one or more of these twelve employee perks to rev up the motivation on your team.

Are You Working on All the Wrong Things?

Have you ever gone through your list of things to do and looked for the easiest thing to knock out first?  Have you ever been moody when you’ve looked through your tasks and said to yourself, “I don’t feel like doing that one, that one, or that one?”  Do you have some items on your to do list that have been there for a while (like months)?

If so, you’re not alone.  However, you may be working on all the wrong things.  One of the top time management secrets that smart business owners implement is to prioritize their tasks in a very special way:  by the highest payback, and not the biggest sense of urgency.

The hard truth is we may not be able to get to every single thing we want to do, especially those of us who are creative business owners who have an idea every minute!  You may have a lot of them captured on your to do list, and some may still be swimming around in your head.

One of the ways that you can choose your opportunities and slim down that ever-growing to do list is to understand the concept of return on investment.   For each task, how much money could it bring you if you did it?  Some of the items that are not urgent but incredibly profitable are often the items we’re too exhausted to do once we complete all the required client and compliance work we need to do.

The successful business owner will make time for those profitable but not urgent activities.  In fact, they will do them first thing in the morning before checking their email or returning calls.

Here’s an exercise to try on your own to-do list.  Assign a dollar value to each task on your list in terms of revenue potential or cost savings.  If you got to that task, how much could it save you or make you?

Then the fun starts.  Sort your to-do list by this new dollar value column you just added.  Sort the highest payback tasks to the top and the lowest payback tasks on bottom.

What’s jumping out at you on the top of your list that you’re not getting to?  Can you find a time on your calendar to do it this week?

When we step back, become more proactive about insisting that we get a return on our time for what we’re doing, we can make a really huge difference in our bottom line.  It’s as simple as assigning some values to the tasks on our to-do list, and then re-sorting them by that value.

However you identify them, the goal is to bring to our attention our highest potential revenue opportunities so we can act on them.   Even if you only get to one more per week than you are currently doing, you’ve made wonderful progress.

It may take some discipline to resist tackling the urgent tasks.  When we accomplish our urgent tasks, we feel needed.  We love rushing to the rescue of clients that need us. When we attempt our high-dollar tasks, it may be a little uncomfortable, even scary.  So that’s why we avoid them.

Prioritizing is something we all have to do, since we live in a world that competes for our limited time.  Prioritizing by highest dollar return on investment is something the most successful business owners do, even if it feels a little uncomfortable in the process.

When we do the serious work of choosing what is really going to move our business forward, we will see the changes in our revenue.  If we can help you with any of your high-payback tasks, let us know.

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