Sunday, March 10, 2013
C M Y K
By BRIAN KELLY
TIMES STAFF WRITER
Amidst the backdrop of an al-ready busy tax return season for2013, some certied public ac-countants already are gearing up for changes in 2014 taxes forbusiness owners earning morethan $400,000 annually. When politicians in Wash-ington avoided a Jan. 1 “scalcliff” scenario that threatenedto send the country into a reces-sion, they did so in part by rais-ing the income tax rate on busi-ness owners earning more than$400,000 a year, raising the ratefrom 35 to 39.6 percent in 2014under the Affordable TaxpayerRelief Act of 2012. While there is not an over-abundance of business ownersin the north country who willbe affected by the change, areaaccountants say they do haveclients who meet the criteria,particularly those whose com-panies are set up as S corpora-tions, and some already arequestioning what the changes will mean for them even as they le tax returns for 2012 earn-ings.“We’re trying to stay ahead of it by trying to be proactive andgive our clients projections of what 2014 will look like,” saidMichael W. Crowley, principalof Crowley & Halloran CPAsP.C., Watertown. “We’ve passedon these changes; they’re justnot digesting them until they start seeing some numbers.”Tax law changes for this yearhave meant the Internal Rev-enue Service delayed accept-ing tax returns until Jan. 30. Mr.Crowley said that, in turn, haspushed back many corporatelers into March, with the com-panies and accountants stillguring out how less publicizedchanges, such as an increase inMedicare taxes, affect businessowners.“There are a lot of little taxesthat are people aren’t evenaware of that are going to startto kick in,” he said.Taxes paid by business own-ers matter, not only to the own-er, but to employees and thepeople the companies do busi-ness with, according to Doug-las L. Hoffman, a partner withDragon Benware CPAs P.C., which has ve locations in thenorth country.“Most of the profits thesebusinesses are making don’tend up in the owners’ pockets,”Mr. Hoffman said. “It’s used toinvest in the business to grow the business.”The issue is of most im-portance to owners of S cor-porations making more than$400,000 a year. S corporationsdo not pay federal taxes; in-stead, the corporation’s incomeis passed on to owners as sala-ries and dividends, which mustbe reported on the owners’ in-dividual income tax returns.“It’s not profits that can bespent on yachts or boats,” Mr.Hoffman said. “It’s normally money that can be reinvested inthe business.”Mr. Hoffman, a former con-gressional candidate, said thiscan create a “downward spi-ral”; businesses that reinvestless money may see a down-turn in business. He said thereare avenues he explores withclients to reduce the tax bur-den, including a codicil thatallows a business to depreciatethe cost of new equipment in asingle year, rather than write itoff over a period of as many asseven years.“That’s a real good benefitfor a business buying furnitureand xtures,” he said. “It couldalso help spur the economy; if you’re buying furniture and x-tures, someone has to sell it to you and someone has to truck itin to you.”John J. Gray Jr., owner of Gray & Gray CPAs C.P., Canton, saidhis ofce experienced a busierthan usual year-end period withclients trying to gure out whatmoves they needed to makebefore anticipated changes inthe tax law were enacted. Forinstance, the amount of money or property that can be given toanother person over a lifetime without federal tax implicationsis $5.2 million, but that number was expected to drop to $1 mil-lion in 2013. Mr. Gray said that“extensive gifting” took placenear the end of 2012 as peopletransferred property to trusts orgave it to relatives.“We did quite a lot of work in December to avoid the taxes were coming,” he said.He said many tax credits were due to expire Dec. 31, al-though the Jan. 1 bill ultimately reinstated the bulk of them.
Businesses, CPAs planning ahead for 2014 tax changes
S CORPORATIONS AFFECTEd:
Rate to rise for companies earning more than $400K; ‘ downward spiral’ a risk
By BRIAN KELLY
TIMES STAFF WRITER
Changes in federal health carelaws have many north country businesses taking two aspirin andcalling their accountants.The full measure of the PatientProtection and Affordable Care Act, commonly called Obam-acare, does not kick in until 2014,but area accountants say they spent a busy December deci-phering the effects on businessesin 2013 and advising clients on what they need to do to prepare.The act is designed to reducethe number of Americans with-out health insurance and, ulti-mately, lower coverage costs. Forbusinesses, the most pertinentaspect is a requirement that rmsemploying 50 or more full-timepeople offer health insurance toemployees or pay the governmenta subsidy — some would call it apenalty or a tax — to offset the costof the employee’s benet.That can lead to employerslooking at employment levels andrethinking employees’ full-timeversus part-time status, accord-ing to John J. Gray, an owner of Gray & Gray CPAs, Canton.“Someone with 55 employees,if they can live with 49, they’ll dothat,” Mr. Gray said. “I don’t know if they have actually done that, butI know a lot have thought about it.”Similarly, a person who worksfewer than 30 hours a week doesnot count against a business un-der the act, according to Mr. Gray.He said a business with perhaps60 full-time employees may de-cide it can make do with fewer,supplemented by part-timers.
“If you have 60 full-time people, you may decide you can get by with100 part-time people,” he said.
Douglas L. Hoffman, a part-ner with Dragon Benware CPAs, which has five locations in thenorth country, said he, too, has cli-ents struggling with the employ-ment-level issue, which he viewsas antithetical to business growth.“Unfortunately, that’s what thegovernment is trying to do in themiddle of a recession,” he said.“They’re passing laws that don’treward people that want to grow their businesses. You’ve got agovernment telling us who has tohave insurance and you’re going to be taxed if you don’t comply.”Mr. Hoffman, a former con-gressional candidate, said he is ad-vising business owners that they should expect higher insurancebecause the act’s mandate thateveryone be insured, regardless of their age, known pre-existing con-ditions or geographical location, will cause insurance companies tocharge higher premiums.“If you’re going to insure every house in the neighborhood, eventhe one that’s on re, you can’tcharge an actuarial cost to theones that aren’t on re,” he said.
He said one positive aspect of the act is that it provides a tax creditto small businesses for premiums,starting as 35 percent and rising to 50percent by either 2017 or 2018. Theproblem with that, he said, is thatcredits also are due to expire by 2018.
“That’s to get some people ex-cited about it, or interested in it,but then it goes away at the end,”Mr. Hoffman said.Stephen C. Foy, an employeebenets consultant and insurancebroker with Stephen C. Foy Asso-ciates, Watertown, said he has “alot of clients who have a lot of con-cerns” about the act’s implemen-tation, although some that havefewer than 50 employees “arequite a bit relieved” to nd out theact’s criteria do not include themin mandatory coverage.“We’re advising them to getas knowledgeable as they can beabout what’s coming down withthe plan,” he said. “Part of theholding pattern is waiting to see where the rates are going to be.”Mr. Foy said several of theact’s effects are still something of a moving target for the groupshe advises, but the most interest-ing question is the effect that thestate Health Benet Exchange willhave. The exchange is an insur-ance clearinghouse that will giveindividuals, families and smallbusinesses a one-stop place wherethey can compare commercial in-surance options and costs, as wellas select coverage online, in per-son, over the phone or by mail.“The exchange is like a farmersmarket, but we have to see whatthey’re going to charge for theirfruits and vegetables,” he said.Mr. Foy said some smaller ben-ets groups may use the exchangeto nd a less expensive plan, or al-low the employees the autonomy to go directly to the exchange andnd the plan best suited for them.“Some employers may say, ‘Wehave intelligent employees, so why don’t you go online and pick out the plan you want?’” he said.He said one side benet of theexchange could be more com-petition among insurers for the“individual” market. He saidpresently, there are about 25,000 within the state who pay for in-surance themselves, not throughan employer or other group, butthat number is expected to jumpto 1 million after the exchange be-comes fully operational.“The concept is really a free-market concept that tries to en-courage people to get health in-surance,” he said.
Health care act has companies rethinking staff sizes
Shred Con, now in its 9th yearremains the north county’s pre-mier provider of onsite docu-ment destruction services.Locally owned and operatedsince 2004, Shred Con providesservice to Jefferson, Oswego,Lewis, St. Lawrence, and Frank-lin Counties. Part owner and op-erations manager, Bill Shepardnotes that Shred Con continuallyreceives the highest ratings incustomer satisfaction for reliabil-ity and timely service.
The company is Hipaa compliantand provides services to medicalfacilities, nancial institutions, busi-ness and nonprofit organizations.The highest degree of condentialdocument destruction is ensured bya hands free process. The companyhas different programs to suit theneeds of their customers. Regularservices timed and sized for the in-dividual customer as well as periodiccleanouts (purges) are available. Thecustomer is always the #1 concern.
In 2011, Shred Con partneredwith Bailing Green LLC to be the ex-clusive provider of shredded paper.Bailing Green is located in the samefacility as Shred Con and providesbaled paper to the post consumermarket to be recycled.
Mr. Shepard states that con-fidentiality and privacy of thecompany’s customers are his #1concern. He encourages anyoneto call him directly at 187-SHRED-CON to learn more.
Shred Con: premier onsite document destruction
WATERTOWN DAILY TIMES
Clents of beneits consultant Steven C. Foy, shown here n hs ofice at the HSBC bulng, have expresse concern about new regulatons.
April 12th -14th: Spring BoatShow- Cerow Recreation ParkFriday 1pm-7pm; Saturday9am-5pm; Sunday 9am-3pmJune 8th: Trash & TreasureDay-Clayton Village WideRummage Sale 9am-3pmJune 14th -16th: The GreatNYS Food & Wine Festival-Cerow Recreation ParkFriday 1pm-8pm; Saturday11am-6pm; Sunday 12pm-5pm *** Come taste and pur-chase the great foods andwines of New York featuring70+ exhibitors including 30+wineries.July 18th-20th: Family FieldDays –Clayton Field on GravesStreet- 4pm-10pmSeptember 21st- 22nd: Vin-tage & Classic Street Meet-Downtown Clayton 10amCome browse the vast en-tries of cars, trucks, and motor-cycles. Sept 22: Exhaust wars,time trials, and burnout con-tests on Graves Street.October 19th: PunkinChunkin & Kansas City StyleBBQ Contest-Various loca-tions throughout Clayton.11am***Punkin Chunkin con-test, food contests, pumpkindecorating contest, scarecrowcontest& much more!November 23rd: HolidayShoppers Poker Run –ClaytonBusinesses 10am-5pmShop Clayton and meet atO’Brien’s Restaurant at 5pm.Proceeds benet the Claytonand local food antries
Clayton Chamber of Commerceplans busy events schedule
LOWVILLE — After almost20 months the Ridgeview Inn,7491 State Route 12, has facedmany challenges, learned andimproved. First and foremostwe would like to thank all of ourpatrons that continue to sup-port us and make us success-ful.The Ridgeview Inn employ-ees about 20 full- and part-time staff. We are closed onMondays; opening for busi-ness Tuesday afternoons at4 p.m. Offering two diningexperiences gives the diningpatron a choice for the moodat that time. The Lounge, withits Adirondack rustic feel, ismore relaxed with the beauti-ful wood re during the coldermonths and the dining roomoffers a casual ne dining ex-perience.Live music continues to bepopular on the weekends withboth the locals as well as theout-of-town individuals. Wecontinue to work with localbusinesses such as Open SkyHealing Arts and the RidgeView Motor Lodge to offer“package specials” for tour-ists and locals.Expansion plans for thespring of 2013 include a ban-quet facility; construction isexpected to start around April1. This will give us the abilityto accept wedding receptionsand accommodate largerfunctions. We will be offeringEaster and Mothers’ Day buf-fets.Like us on Facebook (TheRidgeview Inn) to see daily fea-tures and upcoming events.Watch for happy hour specials.Provide us with comments thatwill allow for us to grow and bet-ter serve you.Give us ideas as to what youwould like to see for features orevents.
Ridgeview Inn:classy food, funin rustic setting;expansion eyed
ONSITE MOBILEDOCUMENT DESTRUCTION
CALL TOLL FREE 187-SHREDCON(74733266) 315-788-2691
Serving Lunch & Dinner
6912 Bardo Road • Lowville
Offering Two Dining Experiences... Relax in our Adirondack-style Lounge or Enjoy Casual Fine Dining in our Dining Room.
WATCH FOR LIVE MUSIC EVENINGSIN OUR LOUNGE
WORLD CLASS FOOD - NORTH COUNTRY FUN