The IRS Starts Taking Tax Returns Today

cropped-cropped-191392v2-max-250x2502.jpgToday, TaxAssurances, LLC will start filing personal and business tax returns with the IRS and various states. Email kmurray@taxassurances.com or call 914-278-9241 to get help filing.

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Tax Returns, Obamacare & You

obamacare-logo_fullThis is the first year that the Affordable Care Act (Obamacare) will impact tax returns for Americans. Starting in mid January, the IRS and many taxpayers will start to receive information about their health coverage for 2014. They’ll need that information to correctly file their tax return for 2014.

Here are some of the forms they should expect to receive:

1095 – A – This form will be received by anyone that purchased insurance through the Health Insurance Marketplace. This form will show details about the insurance coverage including the effective date, amount of premium and the advance premium tax credit.

1095 – B – This form may be provided by private insurers and self funded plans to their policyholders. It summarizes the coverage the policyholder had with them for the year.

1095 – CEmployers may provide this form which provides information about a taxpayer’s health insurance plan and who was covered.

It is worth noting that because this is a transition period that forms 1095-B and 1095-C are not required for 2014 tax year.

 

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SECURE THE FUTURE OF YOUR BUSINESS

iStock_000008233795Medium-man4-908x1024When it comes to your business, hoping for the best won’t ensure its future. Take Jack Stanton for example. Jack spent thirty years building a manufacturing giant, Stanton Solutions Corporation. However, due to the rigors of maintaining his company, he had little time for any personal financial and estate planning. Then, Jack died unexpectedly in a boating accident. All of a sudden, Stanton Solutions, a multi-million dollar manufacturing empire was facing an uncertain future caused by the loss of its owner and upper-most key executive.

What would happen to your business and your family should you become disabled or die unexpectedly? Do you have key employees for family members who could step in and run the company in your absence?

Business Continuation Basics

It is essential to the future of your business and your family to have a succession strategy in place. In order for your business to maintain continuity, you need to implement a succession strategy that coincides with your goals and objectives. Your strategy should be flexible enough to handle changes within the company and its related industry(ies). However, one of the keys to a succession strategy is determining who or whom your successor(s) will be.

Deciding on, and preparing a successor may require years to familiarize him or her with the finer points of the business. Thus, it is important to select a replacement as soon as possible in order to maximize the possibility of a successful transition. In smaller businesses, it is not uncommon for one or more family members to be at the top of the list of potential successors.

If you wish to pass your business on to future generations, you will need to make an honest assessment of the respective needs of your family and business, the qualifications of any interested family members, and whether the family and business would be best served by a continued relationship. Communication with family members is extremely important in order to better ascertain overall interest or concern.

You can prepare yourself by honestly evaluating and reflecting on the necessary components of a well-thought-out succession strategy. Here are some points that may require further elaboration:

• a thorough job description of each position, including details regarding areas of responsibility and delegation of duties;
• a management/organizational plan;
• Assuring the availability of cash to meet the demands of federal and/or state estate taxes;
• a list of potential successors to your ownership, taking every candidate’s job experience and academic background into consideration; and
• a mechanism to ensure extensive on-the-job training for the successor(s).

Other Considerations

A succession strategy may also include a buy-sell agreement funded by life insurance. More than likely, your successor may not have the cash, or the ability, to borrow at the time of successorship. Under such an agreement, the death benefit proceeds of the life insurance can be used to provide the cash necessary for a successor to purchase an owner’s share of stock in the event of his or her untimely death.

In addition, it may be prudent to explore how your unexpected disability could affect not only your plans for successorship, but also your financial well-being. Under a disability buyout arrangement, a disability buyout policy provides a successor with cash to purchase shares in the event of the owner’s untimely disability.

 

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Life After Death for Partnerships: What Happens When a Partner Dies?

business-woman3Have you thought about what will happen to your business when your partner dies? If no other arrangements have been made, the partnership will no longer exist as a legal business organization except for the purpose of winding up its affairs.

When a partner dies, the survivors have only two alternatives: they must either liquidate or reorganize.

Liquidation usually is not a good solution. The business generally will have to be sold quickly and for only a fraction of the value it had as a “going concern.” In most cases, good will is lost entirely. Physical assets may bring little more than one-fourth of their true value.

Reorganization Scenarios

Reorganization generally is a better answer. The reorganization of a partnership usually follows ne of four scenarios:

1. Your partner’s heir(s) become new partners. This plan may or may not work. One or more of the heirs might be a minor, and few of the heirs, if any, will have been regular employees of our business. They may not have the knowledge and experience needed to be a partner.

2. Your partner’s heir(s) sell their interest to someone else. This means you may not have a say in who your new partner will be.

3. Your partner’s heir(s) buy your interest in the business. In most cases, the heirs simply can’t afford to buy the business. Even if they can afford to buy, they may not be willing to pay a price adequately reflecting the value of the business.

4. Your partner’s heir(s) sell their interest to you. This would be an ideal solution if the surviving partners can raise a sufficient amount of cash and if they can agree on the terms of the purchase with the heirs.

The best solution is to plan ahead for the sale of your business upon the death of a partner. This can be accomplished with a “buy-sell” agreement.

A properly structured buy-sell agreement can establish the business value and ensure the continuation of the business by the surviving owners. In addition, the agreement generally establishes a pre-determined price for the business, as well as provides the money to actually buy the business from the heirs.

Value Your Business

Many business owners have a difficult time determining a realistic fair market value for their business. Partners can use a number of valuation methods to estimate the value of their interest n the business. No one method will work in every case but one, or a combination of several, should serve the needs of most business owners.

No matter which method you use to value the partnership, there is one important factor you should keep in mind: The buy-sell agreement should make provisions for future valuations of the business – either through periodic updating or use of a formula. That is because a fair market value that is “just right” today may be too low next year and entirely inadequate in five years.

When partners devote the bulk of their time, effort and ability to the operation of a business, its fair market value usually continues to increase. This constant appreciation should be taken into consideration when valuing the business.

Plan For The Future

Planning today for the future of your business helps protects you, your partner and your families.

You know exactly what will happen if a partner dies…the purchase price, the funding arrangements, etc. It allows you to continue in business and provides the partner’s heir(s) with immediate cash. There may be life after death for partnerships – when partners plan ahead.

 

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Supplier Lines of Credit

moneyAre you looking for financing for the operation of your business? Many companies other than banks and credit unions allow borrowing to creditworthy individuals and businesses. These supplier lines of credit can be used to buy that company’s products and services. These lines of credit can be a great way for a company to get hassle free financing for operations.

Buyer’s Wants

Many times an individual or business needs to purchase a product or service but does not have the available cash to make the purchase. Going to a bank or credit union may present a problem or a hassle. Buyers also may not want to use the available cash because they may have other obligations to take care of like operating expenses. These expenses can include rent, salaries and utilities.

Seller’s Needs

Sellers want individuals and businesses to purchase their products or services so that they can be profitable. To help buyers purchase products or services, sellers may set up lending divisions within their company. Doing this not only eases the process for product purchasing but it builds long term good will with the buyer.

Make The Sale

To make the relationship beneficial for all sellers or their financing companies will review the creditworthiness of a buyer. If the buyer is in good credit standing, the seller will extend credit to that buyer to be paid off over a period of time. Many times the credit is available but not used by the buyer. Other times the credit is available and used by the buyer. Typically there is a limit to how much credit can be used by the buyer.

So if you’re a startup or an established business looking for financing, a supplier line of credit can provide a hassle free way of getting what you need to operate the business. Many times all a buyer has to do is inquire and be creditworthy in order to receive the line. So ask.

 

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