Health Care Bill: Tax Consequences for Businesses

Since many of our clients are also business own their own businesses, we have decided it would be valuable for both our accounting firm and business owners alike to know a few of the different ways that the new Health Care Bill will affect businesses and their owners.  We don’t mean for this to be any kind of political statement, but are merely trying to share this valuable information with you, so you can be prepared for your financial future.

For the most part, the bill will affect larger companies.  For example, firms with 50 or more full-time employees but no health plan will owe an excise tax (or a specific tax for these individuals) starting in 2014 if even one employee gets the credit.  This excise tax will be $2,000 times the total number of employees, minus $60,000.  So, for example, a business with 70 employees would owe $80,000.  The businesses cannot deduct any of these taxes.

Even firms that offer health care plans for their employees can hit by the bill.  They’ll have to pay $3,000 a year for each low income employee who, instead of choosing the employer’s coverage, buys insurance through an exchange and qualifies for the affordability tax credit.

Other groups that should be aware that they will be targeted are insurance firms and self-insurers with high cost plans. Starting in 2018, if the insurance company charges $10,200 or more for individual plans or $27,500 or more for family plans, they must pay a 40% excise tax on the value of plans.

Again, we aren’t writing this to instigate a political argument, but if you are worried about how this Health Care Bill will affect you or your company, contact your accountant or tax preparer.  They should be able to give you some counsel and additional information.

Facts and figures for this information are taken from the April 2010 issue of The Kiplinger Tax Letter.

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Health Care Bill: Tax Consequences for Individuals

With the passing of the recent Health Care Bill, we at Soulence wanted to know how it would affect our clients as well as how it would affect the individual tax payer. Here is some information we feel is very important for you to understand as a taxpayer. We don’t mean for this to be any kind of political statement or propaganda, but are merely trying to share this important information with you, so you can be prepared for your financial future.

Beginning in 2014 there will be a penalty tax on individuals who remain uninsured.  For that first year, the penalty will be the greater of $95 or 1% of your income if you make enough to have to pay taxes.  However, the penalty is capped at $285.  But that is only for individuals; for families, the penalty is calculated at $95 for each uninsured adult in the home plus $47.50 for every person under the age of 18.

The penalty increases sharply the next two years.  In 2015 the penalty will be the greater of $325 or 2% of household income for those who have to pay taxes, but it won’t exceed the fine cap of $975.  In 2016, the fine cap rises to $2,085.  After 2016, the penalty is indexed for inflation, which means it will vary based on inflation.

Lower incomers will get a refundable credit to help them afford coverage, but not until the health exchanges are launched in 2014.  To get the credit, household incomes must be between 100% and 400% of the federal poverty level, which means the household income must be between approximately $11,000 and $44,000 for singles and $22,000 and $88,000 for a family of four.  The amount of the tax credit will be pegged to a percentage of the individual’s income and will be sent by the Treasury directly health exchange.

Again, we aren’t writing this to inspire a political debate, but if you are concerned about how this Health Care Bill will affect you, contact your accountant or tax preparer.  They should be able to give you some advice and further details.

Facts and figures for this information are taken from the April 2010 issue of The Kiplinger Tax Letter.

Tips For Doing Your Own Bookkeeping

This information is for those of you who have decided to purchase a bookkeeping program, like Quickbooks, and to go ahead and do your own bookkeeping.  Congratulations! You are on your way to becoming more organized with your business finances.

Taking a break from the excitement you are feeling, let’s consider that doing your own bookkeeping can be an intimidating project especially if you have never done it before.  But there are some great resources out there to make sure you are doing things correctly.

One thing you can do is learn how to use Quickbooks through an instructor led class or training workshop.  These are usually not very expensive, about $389.95 and up, and can get you started on the right foot.  You can also take classes online or order training programs.  These can start as low as $39.95.  Oftentimes you can find smaller accounting firms that teach these trainings for a lower hourly fee.  Quickbooks Intuit offers some great resources for finding both online, program based, and instructor led courses.

In addition to taking an official course, we suggest the following tips to help you as you begin keeping your own books:

  1. Know What Constitutes a Receipt. A receipt is a cleared check, bank statement, credit card statement or actual receipt.
  2. Stay on Top of It. Do your bookkeeping at least once a month.
  3. Make Sure Your System Makes Sense to You. If you don’t understand it, your tax accountant won’t either.
  4. Be Thorough. When recording income, make sure to include the record type, check number, date, and a copy of the payment.  This will help clear up any client payment disputes.
  5. Just Do It. The hardest part of bookkeeping is sitting down and doing it.

Now that you have an idea of what you need to do to get started on your bookkeeping, make sure you utilize some or all of these resources to make sure you are doing your books correctly.

Also, you can buy Quickbooks from our website at a discounted price. Just click here.

Methods For Effective Bookkeeping

There are a few different options for keeping your financial records.  As we have mentioned before, it is vital that you do keep accurate, up-to-date records.  So how do you best keep your financial records?

Larger companies often hire a CFO (Chief Financial Officer) to manage their finances and to evaluate expenses.  If you have the money to hire a full-time CFO, it is a great option because you would be giving your company the expertise of someone who can take your company to the next financial level.  But this is an expensive option, especially for a small or building company; the average salary of a CFO ranges between $85,955 and $175,671.

If hiring a CFO doesn’t fit your budget, there are other options.  For example, some firms allow you to hire a CFO just part-time, which would lower the cost.  There are other companies that provide the same services as a CFO but at a fraction of the cost.  This is usually because they are not certified.  It may seem like a gamble to use one of these companies, but if you do your homework, you may find they are just as effective as a CFO would be for your needs.

A third option would be to handle the finances yourself.  As we have mentioned before, using a bookkeeping software program like QuickBooks is your best bet with this choice.  These programs allow you to track your payroll, invoices, bank account balances, and accounts payable and receivable.  You can also keep track of your owner equity, inventory, loans, and even print checks.  A Bookkeeping program is effective and tracks almost everything you need to make sure your businesses finances are in order and being utilized to their maximum ability.

So, again, what is the best way to keep track of your finances?  It really depends on your budget and your goals.  If you have a huge budget and want to expand your finances, the hire a CFO.  If you want the services of a CFO without the price hire a part-time CFO or enroll in a CFO program.  If you are newer company with a small budget but big dreams, a bookkeeping software program can get you started on your way.