July 30, 2013

Historic Tax Credits

There has been much in the news recently about the fate of the Missouri Historic Tax Credit Program. As it turns out, the Missouri legislative session that ended on May 17, 2013, failed to take action on a pending bill which would have reduced the state-wide historic tax credit cap from $140 million to $90 million. Many felt such a reduction would have caused significant harm to St Louis’s continuing efforts to revitalize historic buildings. The Missouri Historic Tax Credit Program, along with the Federal Historic Preservation Tax Incentive Program, promotes private sector rehabilitation of historic buildings and economic development.

Following are some of the basic program guidelines: 

Eligibility of a structure for the Missouri program requires that it be individually listed on the National Register of Historic Places, be a contributing structure in a National Register historic district, or be in a local historic district certified by the U.S. Department of the Interior. Renovation costs must be 50% or more of the acquisition cost of the property, and the renovation plans must also be approved by the Missouri State Historic Preservation Office.

The Missouri program tax credit is equal to 25% of the eligible costs of the renovation. These credits can be used to offset Missouri income tax liability in the year issued, carried back 3 years, or carried forward 10 years. The credits can also be sold or exchanged by eligible applicants.

The Missouri Department of Economic Development (MODED) has established specific guidelines governing the eligibility of project costs, and the issuance of the related tax credits.  If total project costs (excluding acquisition) are less than $250,000, the applicant must engage a CPA to compile the list of project expenditures in the format specified by MODED.  If total project costs are $250,000 or more (excluding acquisition), a CPA licensed in the State of Missouri must be engaged to audit the list of project expenditures, and certify all costs adhere to program guidelines.

The Missouri Historic Tax Credit Program continues to provide a valuable incentive for the redevelopment of both commercial and residential historic structures. If you are considering a project of this nature, be sure to contact an Anders adviser for assistance.

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July 23, 2013

The Three P’s of Job Costing

 In a recent survey, 75% of contractors indicated job costing is a top concern for their business.  Are you one of them?  Successful job costing can mean the difference between a profitable business and one that struggles to stay alive.  Companies that don’t look at the hard facts and “guesstimate” cannot compete with contractors that have effective job costing systems in place.  So how do you implement a job costing system or improve your current one?  Follow the three P’s:  Plan, Practice, and Probe.

The 3 P's

Planning – Start by evaluating your current system and determining your goals.  Next, do research to find out what works best.  Don’t hesitate to ask questions.  Find out what other companies are doing and get input from your staff.  Explaining to your employees what you’re trying to accomplish helps to get everyone on board and may lead to other ideas specific to your company.  Job costing requires a team effort.

Practicing – Start small.  Once you’ve determined how your new or adjusted job costing system will be structured, don’t just apply it to all of your open or upcoming projects.  Pick a manageable project that you can compare to a prior one.  This will allow you to gauge the effectiveness of your current job costing system. 

Probing – Analyze the results.  How well does the new system work?  Did you accomplish your goals?  What worked?  What didn’t?  Can you apply this system to all of your jobs?

Repeat – Tweak the areas that need improvements.  Leave things alone that worked well.  Now apply the system to more jobs.  Then to all the jobs.  Learn the nuances of different types of jobs and develop variations your job costing system.  The possibilities are endless.  Continue to repeat this process and your company will continue to evolve and grow.


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July 17, 2013

Reminder: Missouri Small Business Deduction for New Jobs

Are you a small business with less than 50 employees?  Are you creating new jobs within your business?  If so, you may qualify for the Small Business Deduction for New Jobs.

Missouri provides a tax deduction for small business owners of $10,000 for each new qualifying job they create or a $20,000 tax deduction if that new job offers health insurance and pays at least 50% of such insurance premiums.

To be eligible:

  • The small business must have fewer than 50 full-time or part-time employees at all times during the tax year for which the deduction is requested.
  • A new job must be created: the number of full-time employees employed by the small business on the qualifying date exceeds the number of full-time employees employed by the small business on the same date of the immediately preceding tax year.
  • The new job created must pay a wage that matches either the county or state average wage (determined by the Department of Economic Development), whichever is lower.
  • The new employee must be a full-time employee, working an average of at least 35 hours per week for a 52-week period.

To claim the deduction:

  • The employee must complete at least 52 consecutive weeks of employment with an average of 35 hours worked per week.
  • The employee may not have been previously employed in Missouri by your small business or any business affiliated with the small business for a period of 12 months prior to the creation of the new job.

If your small business could qualify for this Small Business Deduction for New Jobs, act quickly.  The deduction is only effective for tax years ending on or before December 31, 2014.  Please contact your Anders tax advisor with any questions you may have.

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July 16, 2013

Choosing the Right CPA Firm to Audit Your Employee Benefit Plan

Now that the corporate audits and tax returns are complete, companies can now begin to look towards the next hurdle. Generally, employee benefit plans with 100 or more participants are required to have an independent audit as part of their obligation to file the annual report (Form 5500).  Your annual audit may be an unavoidable cost of doing business, but it does not need to be a cumbersome process.

One of the most important duties of a plan sponsor is to hire a qualified public accountant. Hiring a qualified auditor helps to protect the assets and financial integrity of the plan and ensure that the necessary funds will be available to participants when they retire. A qualified auditor also helps to keep the plan in compliance with a variety of regulations, which can save the company from penalties being assessed by the Department of Labor (DOL) or possible lawsuits by plan participants.

Even though a plan undergoes an audit, the audit may be deficient due to the selection of an inexperienced auditor. The more training and experience that an auditor has with employee benefit plan audits, the more familiar they are with compliance requirements, plan operations, and specialized auditing standards.  This is one area where you don’t want to hire the lowest cost bidder.

To ensure you have an experienced auditor, you may want to discuss their work with other employee benefit plan clients. How many other employee benefit plans do they audit? You may also wish to ask the auditor if they are a member of the AICPA’s Employee Benefit Audit Quality Center, which is a national network of CPA firms that demonstrate commitment to employee benefit plan audit quality.

For these reasons, the selection of an experienced and reliable auditor is very important. Anders can help you and your plan administrators comply with key ERISA, DOL and IRS requirements. Our audit experience includes defined benefit, profit sharing, 401(k), ESOP, and health and welfare benefit plans.

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July 2, 2013

The Value in Electronically Posting Payments

Many practices have been utilizing electronic posting for some time, surprisingly there are still several that have not initiated the process for one reason or another. Whether it is the practice not taking the time to research and implement the process since they do not understand the value in the tool or maybe it was software restraints at the time. If you have not implemented the process here are a few reasons to reconsider:

  • Drastically decreases time needed for posting – depending on the size of the remittance advice it can take a payment poster as long as a day to post a larger remit. Electronically posting can allow you to post a fifty page remittance in as little as a half hour depending on the transactions.
  • Reason Codes are attached to the transaction-attaches a definition of the transaction such as applied to deductible or denied due to preexisting condition to the transaction.  Many times this definition can be viewed on the transaction screen of the medical software. Medical Software programs will usually allow you to run reports by reason code.
  • Alleviates human error – risk of transposing numbers or missing transactions. Since the transactions are streamlining from the remittance advice directly into the medical software, each transaction does not have to be manually keyed into the system.
  • Attaches a copy of the Explanation of Benefits (EOB) – this allows the account follow up person to easily locate the remittance to work remaining open balances or review the denial.
  • Automate as much or as little as you would like- many systems will allow you to decide how much you want to electronically post.  So if you would like to review all zero dollar payments you can set the systems up to only post the transactions that have a payment associated with it. This will allow you to approve or not approve the transaction before applying it to your system.

Regardless of the reason, it is something that should no longer be left on the back burner.  The amount of time and headaches it can save in trying to get all of the payments posted and balanced is well worth the hassle of implementing the process. If you have not started the process because you just do not know where to start, here are a few places to start:

Software vendor- research the set up process. Many times it is as simple as setting up a 5 digit payer ID in the transaction ID field and learning the few steps to upload them into the software.

Clearinghouse- have your clearinghouse run a claims analysis. This will allow you to see which payers you can receive electronic remittances and post electronically.

Either way, once implemented it will be a process you will not regret. The amount of time and energy it saves is by far worth the set up process.

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