Checking Your Company’s Vital Signs: How to Read and Understand Financial Statements

Your financial statements contain the heartbeat of your business. But much like medical records, it sometimes seems like you need to have a fancy degree to understand them. They’re complex, filled with numbers that you don’t always understand, and can be misinterpreted with unpleasant consequences.

As a startup company, you need to be able to understand this information, degree or no. Join Habif, Arogeti & Wynne, LLP’s David Siegel for a lunch & learn where he’ll walk you through the ins-and-outs of reading and understanding your financial statements. Learn just what those numbers mean and which ones you should be keeping a close eye on. Ask the questions you’ve always wanted to ask, and get answers from a professional accountant with experience in the technology industry. Specifically, you’ll learn how to understand your:

• Standard balance sheet
• Income statement
• Cash flow statement

After this lunch & learn, you’ll walk away with your fingers more firmly pressed on the pulse of your business.

Date: Oct. 29th, 2013

Place: Atlanta Tech Village

Sign up today for this free lunch & learn!

Habif, Arogeti & Wynne, LLP

Will your executive compensation be subject to expanded Medicare taxes?

Maybe. The following types of executive compensation could be subject to the health care act’s 0.9% additional Medicare tax:

• Fair market value (FMV) of restricted stock once the stock is no longer subject to risk of forfeiture or it’s sold
• FMV of restricted stock when it’s awarded if you make a Section 83(b) election
• Bargain element of nonqualified stock options when exercised
• Nonqualified deferred compensation once the services have been performed and there’s no longer a substantial risk of forfeiture

And the following types of gains will be included in net investment income and could trigger or increase exposure to the act’s new 3.8% Medicare contribution tax:

• Gain on the sale of restricted stock if you’ve made the Sec. 83(b) election
• Gain on the sale of stock from an incentive stock option exercise if you meet the holding requirements

We’d be happy to help you determine the best strategy for your exec comp. With smart timing, you may be able to reduce or avoid exposure to the expanded Medicare tax. For more information, contact kayla.payne@hawcpa.com.

Habif, Arogeti & Wynne, LLP

Why you should max out your 2013 401(k) contribution

Contributing the maximum you’re allowed to an employer-sponsored defined contribution plan, such as a 401(k), 403(b) or 457 plan, is likely a smart move:

• Contributions are typically pretax, reducing your modified adjusted gross income (MAGI), which can also help you reduce or avoid exposure to the new 3.8% Medicare tax on net investment income.
• Plan assets can grow tax-deferred — meaning you pay no income tax until you take distributions.
• Your employer may match some or all of your contributions pretax.

For 2013, you can contribute up to $17,500 — plus an additional $5,500 if you’ll be age 50 or older by Dec. 31.

If you participate in a 401(k), 403(b) or 457 plan, it may allow you to designate some or all of your contributions as Roth contributions. While Roth contributions don’t reduce your current MAGI, qualified distributions will be tax-free. Roth contributions may be especially beneficial for higher-income earners, who are ineligible to contribute to a Roth IRA. If you have questions on other ways to save money on retirement planning, please contact kayla.payne@hawcpa.com.

Habif, Arogeti & Wynne, LLP

Tax Incentives Can Save Your Customers Money on Equipment Purchases

What is Section 179 depreciation and how you can use it to save money on this year’s taxes? If you’re a veterinarian, HA&W Partner Rick Rubin, Senior Manager Bob Carreker and Staff Accountant Elise Walker have an answer for you. Read their article featured in this month’s Veterinary Advantage magazine. 

Habif, Arogeti & Wynne, LLP

Exceptional Investor Tax Benefits for Medtech Companies

How do you attract capital to your medtech company when the longer exit scares away investors? HA&W Partner Mitchell Kopelman and Senior Manager Ori Epstein recently wrote an article on an often overlooked tax code section that may help you reel in those investors. Check it out on MD+DI.

Habif, Arogeti & Wynne, LLP

Why Automatic Gratuities May No Longer Be Automatic

 

HA&W Partners Darrin Friedrich and Martin Tanenbaum discuss an upcoming IRS rule that’s about to hit the restaurant industry – and how it could make automatic gratuities disappear. Read more.

Habif, Arogeti & Wynne, LLP

Start planning now if you’d like to deduct medical expenses.

Medical expenses that aren’t reimbursable by insurance or paid through a tax-advantaged account (such as a Health Savings Account or Flexible Spending Account) may be deductible — but only to the extent that they exceed 10% of your adjusted gross income.

Before 2013, the floor was only 7.5% for regular tax purposes. (Taxpayers age 65 and older can still enjoy that 7.5% floor through 2016. The floor for AMT purposes, however, is 10% for all taxpayers, the same as it was before 2013.)

By “bunching” non-urgent medical procedures and other controllable expenses into alternating years, you may increase your ability to exceed the new 10% floor. Controllable expenses might include prescription drugs, eyeglasses and contact lenses, hearing aids, dental work, and elective surgery.

If it’s looking like you’re close to exceeding the floor this year, consider accelerating controllable expenses into this year. But if you’re far from exceeding it, to the extent possible (without harming your health), you might want to put off medical expenses until next year, in case you have enough expenses in 2014 to exceed the floor.

Have questions about the 10% floor or exactly what expenses are deductible? Contact kayla.payne@hawcpa.com.

Habif, Arogeti & Wynne, LLP

Owners of leasehold, restaurant and retail properties must act soon to enjoy extended depreciation-related breaks.

In January, Congress extended some depreciation-related tax breaks that can benefit owners of leasehold, restaurant and retail properties:

50% bonus depreciation. Congress extended this additional first-year depreciation allowance to qualifying leasehold improvements made in 2013.

Section 179 expensing. Congress revived through 2013 the election to deduct under Sec. 179 (rather than depreciate over a number of years) up to $250,000 of qualified leasehold-improvement, restaurant and retail-improvement property.

The break begins to phase out dollar-for-dollar when total asset acquisitions for the tax year exceed $2 million.

Accelerated depreciation. Congress revived through 2013 the break allowing a shortened recovery period of 15 — rather than 39 — years for qualified leasehold-improvement, restaurant and retail-improvement property.

If you’re anticipating investments in qualified property, you may want to make them this year to take advantage of these depreciation-related breaks while they’re available. It’s currently uncertain whether they’ll be extended to 2014. Unsure if you qualify for these breaks? Contact kayla.payne@hawcpa.com with questions.

Habif, Arogeti & Wynne, LLP

Now’s the time to consider short-term GRATs.

Congress’s decision not to include a proposed minimum term for grantor retained annuity trusts (GRATs) in the tax legislation passed back in January — combined with low interest rates — may make it an ideal time to add short-term GRATs to your estate planning arsenal.

A GRAT consists of an annuity interest, retained by you, and a remainder interest that passes to your beneficiaries at the end of the trust term. The remainder interest’s value for gift tax purposes is calculated using an IRS-prescribed growth rate. If the GRAT outperforms that rate — which is easier to do in a low-interest-rate environment — the GRAT can transfer substantial wealth gift-tax-free.

If you die during the trust term, however, the assets will be included in your taxable estate. By using a series of short-term GRATs (two years, for example), you can capture the upside of market volatility but minimize mortality risk.

If short-term GRATs are right for you, consider deploying them soon in case lawmakers revive proposals that would reduce or eliminate their benefits. Contact kayla.payne@hawcpa.com if you have questions about whether short-term GRATs could benefit you.

Habif, Arogeti & Wynne, LLP

Renting out your vacation home brings tax complications.

If you rent out your vacation home for 15 days or more, you must report the income.  But exactly what expenses you can deduct depends on whether the home is classified as a rental property for tax purposes, based on the amount of personal vs. rental use. Adjusting your personal use — or the number of days you rent it out — might allow the home to be classified in a more beneficial way.

With a rental property, you can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.

With a nonrental property, you can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset the rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property taxes.

We can help you determine how your vacation home rental will affect your tax bill — and whether there are steps you can take to reduce the impact. Please contact kayla.payne@hawcpa.com if you have questions about your rental property.

Habif, Arogeti & Wynne, LLP