WHAT YOU CAN EXPECT FROM SOUTHARD, BECKHAM, ATWATER & BERRY, CPA, PS Southard, Beckham, Atwater & Berry, CPA, PS specializes in helping health care professionals and other high income business owners reach their financial goals. Our team works proactively with our clients to help them manage their overall financial affairs. We think of ourselves as the “Quarterback” of our client’s financial network. As the “Quarterback” we communicate with other key financial advisors, coordinate their various plans, independently monitor those plans and generally work to keep them on task. Our services are individually tailored to meet our client’s needs and include: Income tax preparation Accounting assistance and procedure development Business profitability consulting Current tax planning as well as a review of past years returns for overlooked deductions Retirement plan review and monitoring Succession, practice sale or purchase and business arrangement planning Implementation of estate tax plans Financing analysis and assistance The planning process for a new client typically proceeds as follows: Analysis of old income tax returns for missed or incorrectly classified tax deductions. We prepare amended returns if significant items are found. This can result in tax refunds for the client depending on their individual situations. Analysis of the current year financial data to determine if there are changes that can be made to lower current taxes. Analysis of the business structure to determine if there are any changes that can be made to take advantage of planning and tax strategies. This may mean recommending incorporating the business, or if already incorporated it might entail recommending the revocation of the Corporate S election, and so forth. Analysis of the company’s retirement plan to make sure the most favorable retirement plan structure is being utilized based on the company’s employee mix. Analysis of other business related items which might include education planning, associate arrangements and office sharing arrangements. COMMONLY OVERLOOKED TAX STRATEGIES & DEDUCTIONS With the impending increase in income taxes on the horizon, it is more important than ever that all allowable deductions are being taken on your tax returns. When working with new clients, we have noticed a number of strategies and deductions that are often overlooked. Here is a sampling of the overlooked tax strategies and deductions we find: Hiring Family - Have you considered hiring your children or even your parents to work for you? Your children could perform various office tasks, perform janitorial functions or wash the company vehicle. Your parents could make deliveries and run errands. You will save taxes on the wages that you pay and, due to their lower tax brackets, your children and/or your parents may not pay any tax on the wages. In addition, your parents may qualify for the company medical insurance program. The wages your children earn could be contributed to a Roth IRA and later used for college or buying their first home. Tax-free Rental Income - Have you utilized your home or vacation home for a company summer barbeque, Christmas party or management meeting? Did you know that you could pay yourself rent tax-free for use of the property? If you do not rent your property more than 14 days per year, the rental income is tax free to you but still deductible by the business. 100% Meal Deduction - The deduction for meals and entertainment is generally only 50% of the amount spent. However, if the meal or entertainment was provided for over 50% of the office staff, the deduction is 100%. Therefore, a birthday party for a staff person or pizza brought in to the office would qualify. Make sure that your accounting system is setup to separate the two types of meal and entertainment expenses. Vehicle Travel Deductions - Are you taking full benefit for your vehicle travel? We have seen instances with new clients where both spouses are self employed and there is no deduction for vehicle travel. This is often because the accountant has told them that it is a hassle to keep track of. With a little recordkeeping, the amount of miles traveled for business can be tracked and they can add up. Trips to the store, continuing education courses, bank, post office and meetings with professionals are business related travel and fully deductible. Investment Losses - Worthless investment and worthless loan losses are often overlooked. We worked with a dentist who had not deducted a legitimate business loan of $275,000 made to his brother. Upon reviewing the documentation, it was clear that the loan was valid and we amended the tax returns to claim the deduction. Worthless securities are often overlooked because there is not always a sale reported on a broker statement. Investment Interest Expense - Investment interest expenses are deductible to the extent you have investment income. Even if you don’t have enough current income to claim the expense in full, the unused amount may be carried to future years until it is used. Clients who are purchasing a piece of land often assume that it is not deductible because it is not for their primary home or their vacation home. Also, margin interest charged in your brokerage account may be deductible. Charitable Expenses - Expenses related to volunteering, taking mission trips or hosting meetings are deductible charitable expenses on your personal return. Travel, meals and lodging are deductible if there is not a significant amount of personal pleasure, recreation or vacation in the travel. Out of pocket expenses when serving a qualified charity such as refreshments and materials are also deductible. Refinance Points - The points paid on refinancing your mortgage can be written off over the life of the loan. Any unamortized points from a previous loan that is being refinanced with a different lender can be deducted in full in the year the previous loan is refinanced.        State Income & Sales Tax Deductions – Amounts paid for state income taxes are deductible. If state sales taxes are more than the state income taxes, then the higher amount is deducted. Often overlooked as deductions, are the sales taxes paid on the purchase of a boat, vehicle or the construction or remodeling of a home. A standard amount is allowed in addition to the amounts paid on the items noted. Self-employed Health Insurance Deduction – Health insurance premiums generally can be deducted regardless of the type of entity you are operating under. Health insurance can be offered on a discriminatory basis in most instances. Additionally, long term care premiums can be a business deduction similar to the deductions for health insurance. Depreciation Deductions – Depreciation is often computed incorrectly because the wrong depreciable life was used. Component depreciation, allowing for shorter depreciable lives, is often not considered. We find that office remodeling costs are being depreciated over lives much longer than necessary. One of our cases involved a dentist that had extensively remodeled his leased space and the entire cost was setup to be depreciated over 39 years. After analyzing the components of the remodel, shorter depreciable lives were determined, and the tax returns were amended resulting in $50,000 in refunds. IS YOUR EMPLOYEE HANDBOOK UP TO DATE? As a business owner in today’s environment, it is important to have “peace of mind” and a clear and practical solution to employment issues. Southard, Beckham, Atwater & Berry, CPA, PS (SBAB) has recently updated our Employment Handbook with the guidance and support of Center for Employment Dispute Resolution (CEDR). We are satisfied with the process and CEDR’s knowledge of critical legal protections that any successful business needs to have in place today. CEDR’s professional team made a daunting task pleasurable. We believe we are now well protected with respect to employment issues that may arise. We believe it is imperative that you have an up to date employee handbook. If you are working with a version that is a couple years old, based off of one that you acquired through a peer or do not have an employee handbook we encourage you to contact CEDR for a review of your needs. What can CEDR do for you? They provide handbooks and services to the healthcare community that give clear and practical solutions to employment issues for their customers, as well as provide prevention guidance in areas that commonly lead to litigation and/or liability for employers. CEDR provides comprehensive employment strategies with proven methods to effectively coach your employees to success, eliminate those who can’t or won’t perform up to your expectations, and keep you from becoming the next lawsuit statistic. Their methods include: Current and comprehensive Employment Handbook customized for your office and your state that contains all the current legal language to help you avoid litigation. Easy to implement Corrective Action Coaching, with live on-call support so you are never left alone to wonder what to do next. Fair and legal alternative dispute resolution policies (ADRP) advocated by the US Supreme Court. Effective and enforceable confidentiality agreement to keep your confidential and proprietary information proteccted And more! What does SBAB receive when you engage CEDR to prepare/update your employment handbook? The satisfaction of steering you to an excellent resource. When CEDR offered SBAB a finder’s fee for any clients referred to CEDR, SBAB declined the finder’s fee and, instead, negotiated a reduction in the fee charged by CEDR to an SBAB client or referral. In essence, any benefit from a finder’s fee is passed on to you in the form of a reduced fee from CEDR. If you are interested in CEDR or want more information you may contact our office (360) 876-4491 or contact them directly at (866) 414-6056 or http://www.lawsuitfreeworkplace.net. Please inform CEDR that you are a client of SBAB to receive the applicable discount. Southard, Beckham, Atwater & Berry, CPA, PS