Why You Need An Annual Business Review
In addition to providing for you and your family, your small business is a part of this country’s job creation engine. Small businesses make up 99.7% of U.S. employer firms and account for 63% of net new private sector jobs.* Conducting an annual review of your business finances can help keep your business healthy and growing.
Management
No doubt you are pivotal to your company’s success. But at some point, it’s important to focus on bringing up the next level of management, especially if you would like to sell your business or pass it to family members in the future. While mentoring the key individuals who can effectively run the business, don’t forget about key person insurance for them. It’s designed to protect your business if you, a partner or another key employee were to die prematurely.
Plan ahead
What would happen to your business if you or one of your key employees could no longer work? Unless you’ve planned ahead, the company’s continued success, continuity of management and the future of all the families your business supports could be jeopardized. Would the absent worker’s family — which could be yours — be fairly compensated for their interest in the business if that interest needed to be sold?
A buy-sell agreement combined with key person insurance can help relieve concerns you may have. Work with your financial professional and attorney to make sure the agreement is drafted properly to address your and your business’s needs.
Risks
Do you have appropriate processes and procedures in place to handle human resources and compliance issues, such as the new health care coverage rules under the federal health reform law? When was the last time you reviewed your business’s insurance coverage with your financial professional? You may discover that your business does not have all the coverage it needs in this litigious climate. Ask about umbrella and general liability insurance.
Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. Don’t wait, give us a call today.
The Good and Bad of Charging Late Fees
Do you struggle with getting your customers to pay their bills on time? Charging late fees might be helpful, but there are pros and cons to this approach.
On the plus side, late fees:
> May serve as an incentive for customers to pay bills by their due dates
> Are a source of additional cash if and when you receive them
On the downside, late fees:
> May not achieve the desired result of on-time payment
> Could alienate customers who sometimes pay late but are otherwise good to do business with
If you decide you will impose late fees, make sure your customers know about your policy up front. You should include the policy in customer contracts and on the face of your invoices. And be sure the amount you charge complies with any restrictions your state may have.
Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. Don’t wait, give us a call today.
Reviewing Last Year’s Business Records Gives You an Idea of What Worked and What Didn’t
Busy is good. Most small business owners would rather things were too hectic than too slow. As the year winds down, though, let your staff handle the busy-ness while you look at the business — where you are, what you’ve accomplished in past year and where you’re headed in the new year and beyond.
Your bottom line
The quickest way to figure out where you are is to check your bottom line. Are you making money? Are profits better or worse than they were last year at this time? Are you meeting your expectations? If not, why not?
Your business plan
Change is inevitable. And businesses have a way of outgrowing their business plans. But if you don’t have a current plan, you don’t have a way of measuring your progress. So if you’ve been “off road” without a plan for a while, it’s time to formalize a plan that reflects past growth and sets new goals for the next several years.
Your competition
The more you know about your competition, the better. Who are they? How are they different? How are they the same? Where do you overlap each other? Understanding their business model will help you prepare strategically for possible changes in the marketplace.
Your secret weapon
Your work force is your secret weapon, especially if you’re in a competitive market. Dedicated, well-trained employees providing top-notch customer service can help put you out front of even the largest competitor. A rich, competitive benefits package will help you attract — and retain — a high-caliber work force. Health insurance and retirement plans are highly valued benefits. You can offer a variety of other benefits to suit your employees’ needs and your budget. Ask your financial professional for information.
Your future
Do you have a formal succession plan? Are you grooming someone to take over? A well-trained successor could help in the successful — and profitable — transfer of your business. And you can use life insurance to prefund all or part of the sale.
Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track. Don’t wait, give us a call today.
Minimize the Possibility of a Wrongful Termination Lawsuit
As a small business owner, a wrongful termination lawsuit can quickly drain capital reserves, even if you ultimately win the lawsuit. Litigation costs along could bankrupt a fledgling business. As is often the case, the best defense is a strong offense. While there is no sure fire way to prevent the possibility of a wrongful termination lawsuit, there are steps you can take to prevent a previous employee from filing one, or at least be prepared in the event one is filed.
The term “wrongful termination” is a broad term. A statutory claim for wrongful termination can be made on the basis of one of the many federal or state anti-discrimination statutes. An employee who was employed pursuant to an employment contract can allege that the termination was in violation of the terms of the contract. Additionally, a somewhat vague “termination against public policy” argument is sometimes asserted as the basis of a wrongful termination lawsuit. Regardless of the basis of a potential wrongful termination lawsuit, taking steps before a lawsuit is even contemplated is your best defense.
Read, understand and implement an anti-discrimination policy. Federal anti-discrimination statutes are much broader than most employers realize. Consult with your attorney if necessary to make sure that you are in compliance.
Don’t turn your “at-will” employee into a contract employee unwittingly. Most states are “at- will” states, meaning that, in theory, you do not need a reason to terminate an employee’s employment. Contracts, however, can be implied and verbal as well as express and written. Be certain that you do not verbally imply a contract between you and your employees if that is not your intention.
Negotiate a separation agreement when possible instead of an outright termination. If the employee agrees to the “separation” from employment, then it is not a “termination” for purposes of a future wrongful termination lawsuit.
Draft a well-written section in your employee handbook regarding the “at-will” nature of employment as well as a section outlining your compliance with all state and federal anti- discrimination laws. Your disciplinary procedures should also be explained at length in your employee handbook.
Document all disciplinary action taken against all employees. Allow the employee to review the summary of action taken and ask them to sign the summary. Keep these in the employee’s personnel file. Keep all personnel files at least as long as the applicable federal and state statute of limitations for wrongful termination lawsuits.
Give your employee a concrete reason for the termination. Conversely, do not offer any information to third parties regarding the reason the employee was terminated unless absolutely necessary and, even then, only if it can be easily and adequately substantiated.
Top 5 Estate Planning Mistakes
When done well, estate planning can save the loved ones you leave behind a great deal of money in taxes and fees. When done wrong, as we’ve learned with a few high profile cases over the years, your loved ones can find hefty taxes, fees and penalties levied against them.
These are some costly mistakes many people make when it comes to estate planning. Don’t let them happen to you.
1) Procrastination
People procrastinate for many different reasons, one of the most prominent being that no one really wants to dwell too much on the idea of their own mortality. It’s understandable.
Unfortunately, it may prove costly for your family in the event that the unexpected does happen. You want them to be protected. Since no one is guaranteed to live for the next five minutes, much less then next 25 years, it’s important to bite the bullet and get busy planning your estate. If you don’t have an estate plan, the government will decide for you.
2) Failing to Understand the Advantages of Life Insurance
Life insurance offers multiple advantages to your family once you’re gone. First, it helps to cover the costs of any estate taxes and operating expenses the estate generates, which can be substantial. It’s also wise to clue your family in to the finer points of managing the estate long before you’re gone, if possible, so that the learning curve doesn’t prove quite as costly as it may otherwise be when the next generation takes the reins – especially if they’re younger than you’d like them to be when this occurs. The second main benefit life insurance represents is that it can be used as a “tax advantaged” investment. You definitely want to discuss the many ways you can use life insurance as a tax advantaged investment with your estate planner so you can best protect your legacy for future generations.
3) An Overly Simplistic Approach
Simple plans work well for families with less than two million dollars in total assets. If your estate is larger than a million, however, it’s important to make sure you’re making the right decisions to maximize the benefits to your family while minimizing Uncle Sam’s take. While taxes are a certainty, there are steps you can limit the amount of taxes taken from your estate. A simple move, such as including provisions in your will or living trust agreements at the death of the first spouse can protect your assets from excessive taxation thus protecting your estate for your children.
4) Failure to Revisit Your Plan Frequently
You don’t have to revisit your estate plan monthly or even quarterly. However, it’s a good idea to revisit it with any changes in your life to make sure all the information is properly updated. These changes include new jobs, divorces, marriages, the death of aging parents, the death of a spouse and even milestones in the lives of your children.
5) Neglecting the Little Details
While you may feel as though a big weight has been removed from your shoulders once you’ve put the plan on paper, if you don’t follow up with the appropriate signatures, notarizations, etc. then your careful planning is in peril of negation.
In addition to these five big mistakes that can derail your efforts to properly plan your estate, there are a few things you’ll want to remember and include in the estate planning process, such as planning for pets, protecting digital assets and assigning guardianship for your children.
When you keep the mistakes you could make in mind, the success of your estate planning efforts is much more likely. Don’t forget to consult an expert to help you navigate the tricky waters of estate planning so you can rest assured your family is truly protected — even when you can’t be there to protect them.
For more information about getting started with planning your estate or your personal estate planning issues, please don’t hesitate to contact us!
What is a Defined Benefit Plan?
Simply put, a defined benefit plan is a pension plan that uses a formula to promise a predetermined monthly benefit to an employee at their retirement. However, the specifics that go into a defined benefit plan are less simple, and it is important for all involved to understand the ramifications of the plan before it is entered into.
The Formula for Defined Benefit Plans
Most plans use a formula that includes the employee’s earnings, years of employment and age at retirement. As of 2014, the IRS caps this type of retirement benefit at $210,000.
The final salary plan takes into consideration the employee’s number of years worked and then multiplies that by the current salary at the time of retirement, and then finally, multiplies it by an accrual rate. The accrued amount is then available to the employee as either monthly payments or a lump sum.
Types of Defined Benefit Plans
Defined benefit plans can be either funded or unfunded. An unfunded plan means that the company does not set aside any assets to ensure benefits can be paid when the plan goes into effect. This is known as a Pay-as-you-go plan. In the United States, these plans are only allowed in the public sector.
The second type of plan is a funded plan. In this case, the employer, and sometimes the employee make contributions to the plan, so future benefit obligations can be met. These contributions are then examined by an actuary at certain intervals to ensure that the contribution level, as well as the investment of the contributions, will equal or surpass the benefit obligations.
Disadvantage and Advantages of Defined Benefit Plans
The disadvantage of the defined benefit plan is that it is less portable than other pension plans. The advantage, however, is that most plans will pay the benefit to the employee as an annuity, so there is less chance that the employee will out live their retirement benefits.
For more information about defined benefit plans for your dental practice, please contact us!
What are Tax Extenders for Small Businesses?
Tax extenders are a group of fifty tax breaks that apply not only to small businesses, but teachers and individuals as well. What you need to be concerned with are those that apply directly to small businesses, especially dental practices. While these tax breaks are temporary in nature, they can have a serious impact on how you conduct your business for the next year.
In 2013, these tax breaks actually expired on December 31st, but the United States Congress retroactively extended the tax breaks into 2014. They typically do this at the last moment of the year or right after the first of the new year, making it difficult for small businesses to plan ahead. These tax breaks are also only renewed for one year meaning they will have need to extend them again before the end of 2014, so they can carry over into 2015.
Currently, the tax extenders for small businesses include such items as a work opportunity tax credit of $1,375, a 15-year straight line cost recovery for qualified leasehold improvements for restaurant and retail establishments of $2,382, and bonus depreciation of $1,492.
Additional tax extenders include:
- Exclusion of 100 percent of gain on certain types of small business stocks
- A reduction in the S Corporation recognition period for built-in gains tax
- Qualified zone academy bonds
- An employer wage credit for activated military reservists
- A new market tax credit
While not all tax extenders are good policy for the government or businesses, some of the tax breaks do help level the playing field and provide companies, including dental practices, a way to define actual business expenses with less effort.
For more information on tax extenders, please contact us!
Steps to Reduce the Risk of Getting Hacked at Your Dental Practice
Hacking is on the rise and dental practices are not immune from the risks hackers pose to businesses today. In fact, due to the rapidly evolving pace of technology and the single-minded resourcefulness of today’s hackers, businesses, especially in those in the medical industry, face greater risks than ever before.
Bigger businesses have become increasingly harder nuts for hackers to crack, despite a few high-profile hacking instances, making the little fish more appealing targets for many hackers. That’s why your small dental practice must begin creating policies that make your business a less attractive target for hackers of convenience.
Educate Yourself and Your Employees on Cyber Security
It might sound like a buzz word of the future, but the future is now when it comes to securing the information that matters most to your business. Educate yourself and your employees on what needs to be done to secure passwords, improve network security, safeguard person, medical information and reduce the odds of hackers finding backdoors into your network.
Create Policies that Promote Cyber Safety
It might be tempting to allow employees to bring in their own devices to connect to the business network, but it exposes your network, your employees, your customers and your practice to untold risks. The best practice is to create policies that strongly discourage these actions – complete with consequences for offending employees.
Encrypt Your Data
All information has value. Information that’s stored on your networks and not actively being used by employees needs to be encrypted. Most operating systems offer encrypting as a feature. It’s a simple matter to activate and provides a huge benefit when no one is actively logged into the computer.
Unfortunately, your systems are still vulnerable while the computer is operational, which is why you must also set computers to log out after 10 or 15 minutes of inactivity.
Taking more proactive and forward-thinking measures to reduce your risks of getting hacked at your dental practice is the best way to reduce your risks in today’s business environment that is increasingly reliant on technology.
Password Strength – More Important Than You Think in a Dental Office
A password is an account’s first line of defense against hackers. Without a strong password, hackers may be able to breach your accounts’ security and access sensitive information vital to your dental practice that they can use for their own personal gain. Unfortunately, few people realize just how important the strength of passwords can be. In fact, according to Password Genie, although the average person visits 25 password-protected sites, most people use only six different passwords, and 73 percent of people use the same password for every site.
Understanding Hackable Passwords
Studies have shown that some passwords are inherently weaker than others. The easier your passwords are to guess or remember, the easier they are to crack. According to Imperva, shorter passwords and passwords that use only one type of character are the most vulnerable to attacks from hackers.
Imperva also reports that as many as 60 percent of users choose passwords that contain only letters and numbers, and up to one-third of users have passwords containing six characters or less. Studies also show that certain common passwords are hacked more frequently than others. These passwords include predictable phrases like “123456,” “password” and “iloveyou.” Using any of these phrases for your dental practice account passwords increases the risk of a breach.
Important Statistics
Even if a password isn’t easy to guess, it may still be vulnerable. Password Genie reports that a computer program can crack a 6-character password that used only lower case letters in as little as ten minutes, regardless of the letter combination. Likewise, a 7-character password with both upper and lower case letters would take 23 days to crack. On the other hand, a 9-character password that includes uppercase letters, lowercase letters and numbers or symbols would take 44,530 years to crack using an automated computer program.
Based on the evidence, it is clear that the strength of passwords is extremely important. Hackers often use computer programs to discover passwords, so simply creating a password that is difficult for a human to guess isn’t enough to protect your accounts. To prevent breaches, passwords should contain a combination of uppercase letters, lower case letters, numbers and symbols. Passwords of at least eight characters are also recommended.
California Paid Sick Leave Act Effective July 1, 2015
On September 10, 2014, Governor Brown signed into law the “Healthy Workplaces, Healthy Families Act of 2014” (“HWHFA”) (AB 1522). The purpose of this law is to provide protection to California employees by ensuring, among other things, that they are able to address their own health needs and those of their families.
Effective July 1, 2015, this new law will require California employers to provide paid sick leave benefits to their employees. Some of the conditions associated with this law include displaying a poster that addresses employees’ rights for mandatory sick time pay and providing a written notice of paid sick leave rights to newly hired employees at the time of hire.
Depending on the extent of the situation, employers that violate or fail to comply with this law could be forced to pay up to three times the amount of the unpaid sick pay due and administrative fines that vary from $50 to $4,000 per violation.
Learn more details about what employers need to know about this law in a presentation given by Only for Dentists principal, Bassim N. Michael, CPA, CVA, MS Tax.
For more information about this law or how it may affect your individual circumstances, please contact the accountants at Only for Dentists.
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