March 19, 2015

28th Annual Hoops for Hope Tournament

CLICK HERE TO SEE THE STANDINGS! 

It’s March, and at Anders, that means stacks of tax returns, audits and MARCH MADNESS. Anders’ annual Hoops for Hope basketball pool is underway and looking to have its biggest year yet. Now in its 28th year, the pool, started out as just an office pool, moved to one that included clients and colleagues, and eight years ago changed its focus to raising money for Anders’ Charity of Choice.  Each year, Anders partners and staff have elected a charity to support and Hoops for Hope has become one of the year’s largest fundraisers. Anders has donated all the prizes and 100% of the proceeds collected go to the charity. This year’s Charity of Choice is Friends of Kids with Cancer. Friends of Kids with Cancer is a local organization devoted to enriching the daily lives of children undergoing treatment for, and survivors of, cancer and blood-related diseases.

Four years ago, with “tongue in cheek,” we added a Triple Diamond Super Platinum Sponsorship. With expectations of the tournament being bigger each year, we raised the name to Triple-Diamond MEGA Platinum Sponsorship three years ago. How can you get bigger than MEGA? For just $100 or a prize, a company or individual can get their logo displayed on our Hoops for Hope web page. We’ve already had an amazing amount of support from clients and friends eager to be a sponsor. With their help, we will be able to help Friends of Kids with Cancer support kids and families in need.

We hope you’ll join in the fun and participate in our Hoops for Hope tournament that benefits such a great cause. Starting March 15 at 6 p.m., you can fill out a bracket for $10 at http://amdllp.com/ncaa2015/but hurry, you only have until March 19, 2015, 11 AM CST.

Thank you to our 2015 Triple-Diamond MEGA Platinum Sponsors!

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March 13, 2015

Anders Honored with St. Louis Business Journal’s 2015 Innovation Award

The St. Louis Business Journal announced the winners of the 2015 Innovation Awards, and Anders was named the winning company in the Accounting category. Each honoree was awarded based on their commitment to industry innovation, and dedication to helping people in a unique way. While innovation has always been the key ingredient to business success and prosperity, it is now the driving force behind the St. Louis start-up community’s advancement to one of the top tech hubs in the country. A full profile of each winner will be featured in the April 17th issue.  To see the full list of winners, click here.

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March 10, 2015

Excess Contributions to an IRA Means Excise Tax, but it Doesn’t Mean it Can’t be Corrected

If a taxpayer makes a contribution to their traditional IRA or ROTH IRA and later realizes they were not eligible, they have made an excess contribution subject to an excise tax. The excise tax is 6% of excess contribution and applies each year these funds remain in the account.

Correcting Excess IRA Contributions

How do you correct this situation?

  1. You need to withdraw the excess contribution plus any earnings (or loss) by the due date of your return including extensions.  This avoids the 6% excise tax all together but any earnings are taxable.
  2. If the funds are still in your account after the due date (including extensions) of your return, you need to withdraw the excess contributions as soon as you can.  In this situation, you only need to withdraw the contributions, not the earnings.  Each year the funds remain in the account, you will need to file Form 5329 and calculate the 6% excise tax.  For example, if you incorrectly contributed $5,000 to a Roth for the last two years, you will owe $300 for the first year ($5,000*6%) and $600 for the second year ($5,000 from year 1 + $5,000 from year 2 * 6%).  As long as you withdraw the $10,000 before the end of year 3, you will owe no more excise tax. The earnings on the $10,000, however, can remain in the Roth account.

If you find yourself in this situation, please do not wait. Contact your Anders advisor to avoid unnecessary taxes.

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March 6, 2015

Saved Founder Over $500,000 in Tax on Sale of Company Shares

We were able to save the founder of a very successful startup company over $500,000 in tax on the sale of a large portion of his founders shares in the company.  This was accomplished through diligent stock planning and entity selection planning.

Learn more about our startup services here.

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March 3, 2015

If You’re Pitching Your Startup to “Sharks”, Having a Valuation is a Good Idea

If you’ve ever watched an episode of Shark Tank on ABC, you would be familiar with the pitches contestant-entrepreneurs make to the Sharks asking for investments in their start-ups in exchange for a certain percentage of equity in the business. The entrepreneur may pitch something along the lines of “$250,000 for a 10% stake,” indicating he or she believes the entire business is worth $2.5 million.

Getting the Sharks to agree to that value, or come up with their own deal, is the crux of the show. While the start-ups that appear on Shark Tank do benefit from getting publicity, they are mainly there to get more funding for their venture. This is the primary reason many start-ups need to be valued. When start-up companies meet with potential investors (i.e. Sharks, Angels, Venture Capitalist Firms, etc.) and present an independent, third-party CPA valuation report, it helps remove some of the debate over the value of the company. This generally presents the entrepreneurs as more serious and more credible.

Other than obtaining funding, or appearing on an episode of Shark Tank, there are many other reasons a start-up would require a business valuation. Four of the additional reasons a start-up would require a business valuation are:

  • Transactional purposes – Some entrepreneurs may be interested in having a business valuation completed when they are considering selling the business to another party. Instead of pulling a value “out of thin air” and potentially selling themselves short (or drastically overvaluing the business and possibly turning off investors), a valuation may help the business owner keep in mind a “floor price” of the lowest value they’re willing to sell the business for.
  • Tax purposes – If the startup issues stock options as a form of compensation (which MANY startups do), the company may be required to get a business valuation in order to set the strike price of the options under Internal Revenue Code Section 409A. A valuation may also be necessary for gift and estate tax planning purposes.
  • Management planning – Some business owners choose to track the value of their stock on a periodic basis (annually, bi-annually, etc.) for a variety of reasons, including internal financial reporting purposes or for the sale of stock by investors.
  • Litigation – Many businesses, at some point, become a party in some type of litigation matter. In certain cases, the business may need to be valued as part of the litigation process in order to quantify damages, such as loss of business value.

While most start-up companies focus on valuing their business for capital raising purposes, there are many other scenarios in which a business valuation would benefit the company. To discuss the benefits of a business valuation for your start-up, or to determine if your company should have one performed, contact an Anders valuation expert.

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