Don’t Miss Out on Ohio’s Workforce Training Voucher Program

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The Ohio Workforce Training Voucher Program is now in its third year. This employer-driven program is targeted to provide direct financial assistance to train workers and improve the economic competitiveness of Ohio’s employers. The program is designed to offset a portion of the employer’s costs to upgrade the skills of its incumbent workforce and will provide reimbursement to eligible employers for specific training costs accrued during training.

This time around businesses will have a chance to claim a piece of $29.4 million. That’s the good news. The bad news however, is that you have to be quick if your business has a desire to claim any portion of these funds. Similar to round two of the program, a pre-application process is available. The period to complete this process began Sept. 15, and will continue until the application officially goes live on Sept. 30.

According to the state, the funds are to be made available on a first-come, first-served basis. Employers can apply for a credit that will reimburse them up to 50% of eligible training costs – which could mean the business could be reimbursed up to $4,000 per employee.

In order to qualify, training must have been performed between Aug. 1, 2014, and Dec. 31, 2015. Employers have the option to apply for vouchers for training that has already occurred.

Pre-application allows employers to enter as much information and specific details as possible. When the application goes live, all you need to do is log on to your account and submit it. We expect all funds to be accounted for within the first few hours of the application going live. We urge businesses to take time to complete the pre-application process as soon as possible.

What Is Considered Eligible Training?
• Classes at an accredited education institution
• Training that leads to an industry-recognized certificate
• Training provided in conjunction with the purchase of a new piece of equipment
• Upgrading computer skills (e.g. Excel, Access)
• Training for the ICD-10-CM/PCS diagnostics classification system
• Training from national, regional or state trade associations that offers certified training
• Training for improved process efficiency (e.g. ISO-9000, Six Sigma, or Lean Manufacturing)
• HR Certification – limited to HR staff only

What Companies Can Apply?
For-profit entities located in Ohio and that operate in one of the following industries are eligible to apply for the Incumbent Workforce Training Voucher Program:

• Advanced Manufacturing
• Aerospace and Aviation
• Automotive
• Bio Health
• Energy
• Financial Services
• Food Processing
• Information Technology and Services
• Polymers and Chemical
• Research and Development
• Companies with a Corporate Headquarters in Ohio (with limited availability of funds)

Real Estate Investment: 1031 Exchange

What is a 1031 exchange (also called a like-kind exchange) and why would you want to do it? If you own investment real estate you may have already engaged in this activity and reaped the benefits, but for others just getting into real estate investment this may be a new topic of conversation.

A 1031 exchange is a swap of one investment asset for another. If done under the rules of 1031 you will in most cases be able to defer any tax due at the time of exchange, which allows your investment to grow tax deferred. You can roll any gain on the swap over into the new investment asset until you actually sell that investment asset for cash at which time you would then recognize any gain.

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There are special rules that apply when depreciable property is exchanged. It can trigger gain known as depreciation recapture that is taxed as ordinary income. In general if you swap one building for another building you can avoid this recapture.

Some general guidelines regarding this provision: It is only for investment and business property, most 1031 exchanges are for real estate. Properties are of like-kind if they are of the same nature or character, this can have a broad interpretation. If you receive cash after the exchange is complete this cash may be taxed as partial sales proceeds and is generally considered capital gain.

This is a general overview and there are many other rules and regulations to complete a successful 1031 exchange transaction for which you would want to consult your accountant.

By: Christine Schultz, Accountant

Ten Things You May Not Know About an LLC

You probably know of several businesses whose formal names end with the acronym LLC. And you probably also know that LLC stands for limited liability company. Here are ten things you may not know.

  1. An LLC generally protects its owners from personal liability for business obligations in much the same way a corporation does, but an LLC is not a corporate entity.*
  2. Like a corporation, an LLC can do business in multiple states, although an LLC must be organized in a specific state.
  3. The owners of an LLC are called “members.” There is no limit on the number of members an LLC can have, and members don’t necessarily have to be individuals. Members’ management roles are typically spelled out in an operating agreement.
  4. Upon formation of an LLC, the members contribute cash, property, or services to the LLC in exchange for LLC shares or units.
  5. An LLC may borrow money in its own name and is responsible for repayment of the debt.
  6. An LLC is usually treated as a partnership for federal income-tax purposes. (The remaining four points assume partnership treatment.)
  7. Like partners, LLC members are not considered employees of the company. However, an LLC can have non-member employees.
  8. LLC members are taxed directly on company income. The LLC itself doesn’t pay federal income taxes.
  9. If an LLC has a loss, its members generally can deduct their share of the loss on their own tax returns.
  10. For tax purposes, an LLC’s income and losses are divided among its members according to the terms of their agreement. Tax allocations must correspond to economic allocations of profit and loss.

An LLC is but one structure you might consider using for a business venture. We can help you determine which type of arrangement will best meet your objectives.

* Each state has its own laws governing LLCs. Consult with an attorney before establishing an LLC.

Filing Taxes: Together or Not Together?

One of the more common strategies married couples consider when thinking of ways to reduce taxes is whether or not they should file their tax returns separately, rather than jointly. While this strategy may be a common consideration, it is not as common for this strategy to actually be implemented. Following are a few reasons why “together” is usually the best option for most married couples when filing their taxes.

​First, taxpayers filing separately are subject to the higher tax brackets earlier than taxpayers filing their returns as single. For example, in 2014, a taxpayer filing as single can earn up to $186,350 before being subject to the 33% tax bracket. However, a married filing separately taxpayer can only earn up to $113,425 before being subject to this tax bracket.

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​Also, filing separately eliminates the flexibility of deductions that taxpayers would have if they were to file their returns jointly. With a joint filing, taxpayers can decide to use either itemized deductions or the standard deduction, based on which method offers the most benefit. Even though taxpayers filing separately are still able to choose which deduction they take, the method that one spouse uses also becomes the method the other spouse must use. This means that if one spouse uses itemized deductions, the other spouse must also use itemized deductions, even if the standard deduction would have been more beneficial. Additionally, filing separately eliminates the opportunity for taxpayers to take various other deductions and credits. These include adoption expenses, child and dependent-care costs, educational tax credits, and interest paid on student loans.

​While filing jointly is often the best option for married couples, there are some cases in which filing separately can be more beneficial. As a result, it is important to keep organized records and send all necessary documents to your tax advisor so that a proper analysis of your situation can be made.

By: Ruben Becerra, Staff Accountant

Creating a Winning Succession Plan

Few business owners plan their exits from their businesses with as much care as they planned their entries. Just as every owner starting out needs a business plan, every owner looking to retire needs a succession plan to help transfer ownership and to achieve his or her retirement goals.

The Four Goals of a Succession Plan

While situations vary from business to business, most well-thought-out plans are designed with some or all of these objectives in mind:

  • Protecting the company’s value and ability to compete
  • Minimizing conflicts among family members
  • Reducing gift and estate taxes
  • Achieving the owner’s retirement goals.

Start Early

succession-planningStarting work early on a succession plan may help ensure a smooth change of ownership. An early start helps those family members who are active in the business to grow into their new roles and responsibilities over time. Moreover, starting early provides the opportunity to make changes to the plan, if necessary, before the actual transfer of control.

As a business owner, you should be careful not to attach provisions to the transfer of ownership that could limit the ability of the business to grow and compete in the future. Some business owners have included provisions in their wills or in the company bylaws that, for example, limit the level of debt the business can carry or restrict the types of opportunities the company can pursue.

A succession plan is also an effective tool for minimizing your estate taxes. You can capitalize on the $14,000 federal gift-tax annual exclusion by giving your children company stock over time. However, it’s important that you determine the fair market value of the shares you transfer so that you don’t run afoul of the IRS.

Letting go of the business you have spent a lifetime building is a huge decision. That’s all the more reason why you should take the time to do it correctly. We can help you put together an effective and workable succession plan. Please give us a call.

Tools of the Trade: Financial Statements

Some “tools of the trade” are specific. Carpenters need hammers. Programmers need computers. Financial statements, however, are critical tools for all businesses. They allow you to monitor profitability, improve financial management, and provide banks and other lenders with vital information.

Primary Tools

There are several financial statements. The two most well-known are:

  • The Balance Sheet shows the assets of your business and the amounts it owes (liabilities) on a particular date. The difference in the two numbers is the amount of owners’ equity.
  • The Income Statement is a summary of your business’ revenue and expenses over a certain period of time. It reveals your income (or loss) from core operations and then incorporates other income and costs and any extraordinary items to arrive at a net income figure.

Level of Services

financial-statementA CPA can provide different levels of service when it comes to financial statements. How you plan to use the statements will determine the level of review or verification required.

Compilation. If you want reports mainly for internal use, a CPA will simply compile the figures you provide and prepare the appropriate statements. No assurances are made about whether the statements are presented fairly.

Review. Potential lenders will generally require more than a simple compilation. The CPA will need to provide limited assurance that, based on limited procedures, nothing came to the accountant’s attention that would indicate that material changes to your financial statements are necessary. That requires looking at your accounting policies and practices, how your business operates, the actions of your board of directors, recent changes in your business, and so forth.

Audit. In some instances, you may need to have audited financial statements prepared. This is the highest level of service and requires the CPA to thoroughly examine your books and records and all of your financial policies and procedures. Then, the CPA can provide an opinion about your statements.

When Marriage Ends in Divorce or Separation

The end of a marriage is also the beginning of a new financial life. Reconsidering your financial arrangements — whether or not your income will be reduced — should be a priority as you adjust to your new circumstances. The major issues demanding attention and resolution include the following.

Retirement Issues

  • The QDRO. A divorce settlement often determines how any anticipated future pension and/or retirement plan benefits will be divided. You may receive part of your ex-spouse’s retirement benefits, or your ex-spouse may receive part of yours. However, an employer may distribute retirement plan benefits to a former spouse only after receiving a court-issued document that meets the requirements for a Qualified Domestic Relations Order (QDRO). If you are to receive benefits from your ex-spouse’s plan, you must follow through on obtaining the QDRO and ensuring that the plan’s administrator receives it.
  • Change of beneficiary. The individual you have named as the beneficiary of your retirement plan account will automatically receive all the funds in your account after your death. A divorce or other agreement generally has no effect on a beneficiary designation. Therefore, you must formally amend the appropriate plan documents to name someone other than your ex-spouse. As soon as your divorce becomes final, you should give your plan administrator a new beneficiary’s name. Also, be sure to change the beneficiary on any IRAs you may have.
  • Adjusting retirement plans. Your financial future may look very different without your spouse. You may be able to improve your lifestyle after retirement by taking advantage of additional current contributions to your 401(k) or other tax-deferred retirement plan. You might also consider contributing to a Roth or other IRA to supplement your employer’s retirement plan.
  • Social Security. Your ex-spouse’s work record may entitle you to receive a benefit once you are at least 62 years old and meet the law’s conditions. So, after a divorce, it is a good idea to call the Social Security Administration to inquire about any benefits you can expect to receive.


Investments 

Le divorceYour new marital status may mean a shift in your investment goals and, therefore, in your investment strategy. Your present assets may be more or less risky than you will want in the future. You should also examine your new living costs to make sure your arrangements are realistic for your income and needs, and to decide how much and how often to invest for the future.

Financial Documents

 After a divorce or separation, a general review of all your financial documents is advisable. In light of your new situation, be sure to examine the following.

  • Estate plan. If your spouse is your heir, you need to revise your will to name another beneficiary(ies). Also, marital status is often a key factor in planning an estate. You should review your present plan with your professional advisor to update it for your new situation.
  • Life insurance. The change in your marital status most likely will require a reevaluation of your life insurance policies and, at the least, a change in your beneficiary designations.
  • Credit records. It is important to separate your credit history from your spouse’s history so that future reports will be based only on your own credit use. That will involve notifying credit bureaus of your divorce and removing your spouse’s name from any joint credit accounts.It is important to separate your credit history from your spouse’s history so that future reports will be based only on your own credit use. That will involve notifying credit bureaus of your divorce and removing your spouse’s name from any joint credit accounts.It is important to separate your credit history from your spouse’s history so that future reports will be based only on your own credit use. That will involve notifying credit bureaus of your divorce and removing your spouse’s name from any joint credit accounts.

Get Professional Assistance

A divorce or separation may give rise to numerous tax issues, and a settlement agreement that reduces taxes may benefit both sides. Professional legal and tax advice is essential as your agreement is being negotiated.