October 2016 - Anders CPA

October 25, 2016

Missouri Small Business Incubator Tax Credit Can Help Startups Grow

St. Louis is known for many things, but as we’ve been discussing recently, many entrepreneurs are finding St. Louis is also the City of Startups. There are multiple programs in place to help startups gain traction and launch their company, including the Small Business Incubator Tax Credit program. This credit uses private funds to establish a “protective business environment” (incubator) in which multiple small businesses can collectively operate, fostering growth and development during the startup period. It’s this program and others like it that have given St. Louis its new name.

Understanding Incubator Programs

An incubator is both a program that participants can use to assist in the growth of their startup businesses and a building that can be divided into smaller units of space to be leased by those small businesses. Participants of incubator programs are sole proprietorships, business partnerships, or corporations operating a business for profit.

Sponsors of the incubator must make certain business development services available to the small business tenants, including financial consulting assistance, management and marketing assistance, business education, and physical services such as personal computers, a copy machine, fax machine, conference rooms, wet labs, etc. By sharing the space and business services, costs are reduced for individual startups, allowing them to use their profits in other ways. The incubator is meant to be a temporary home for new businesses. After a set amount of time, companies will move out to make room for another startup.

Who Can Sponsor an Incubator?

Certain organizations typically fill the role of a local sponsor of an incubator program, including:

  • Missouri municipalities, counties, special tax districts, and regional planning commissions
  • universities, community colleges, state colleges, and area vocational schools
  • Not-for-profit organizations

The sponsor must enter into a written agreement with the DED stating that they will establish, operate, and administer a small business incubator program or provide funds to another organization that operates an incubator program. Applicants are evaluated based on their ability to carry out the incubator program provisions, the location of the incubator and economic impact on the community (with the goal to spread incubators throughout the state), and conformance with any local economic development plans.

Incubator Tax Credit

Any Missouri individual or business taxpayer who makes a contribution to an approved incubator sponsor, aside from those that benefit directly from General Revenue such as public universities, may be eligible for a tax credit equal to 50% of the contribution. Tax credits can be applied to:

  • Income tax, excluding withholding tax
  • Corporate franchise tax
  • Bank tax
  • Insurance premium tax
  • Other financial institution tax

The sponsor must submit the appropriate paperwork within 12 months of donation, and upon approval by the DED tax credits will be issued for the year in which the contribution was made. Any unused credit can be carried forward up to five years and applied to future tax liability. In addition, the credits are sellable and transferable but for no less than 75% of the value and not to exceed 100% of the credit. Sales of credits are considered taxable income. The maximum amount of tax credits that can be authorized under this program in a calendar year is $500,000, and applications are accepted on a first-come basis.

The Missouri Small Business Incubator Tax Credit offers a significant advantage to startup companies with a sizeable tax benefit for many Missouri taxpayers. If you have questions about the incubator program, including the multiple reporting requirements, or want to discuss your eligibility as a program participant, sponsor, or contributor, contact the Anders Startup Group.

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October 19, 2016

Pam Ditch and Cindy Gray Provide QuickBooks for Nonprofits Training

Tax Seniors Pam E. Ditch, CPA and Cindy M. Gray, CPA  are teaching a QuickBooks® for Nonprofits training course for Volunteer Lawyers and Accountants for the Arts (VLAA). This two-part, hands-on training for PC users with little or no accounting or QuickBooks experience is being held in the LaunchCode Mentor Center on November 9th and November 16th.

Optional pre- and post-sessions cover bookkeeping basics and payroll. The training will cover both QuickBooks Pro (desktop version) and QuickBooks Online.

Learn more and register for QuickBooks for Nonprofits.

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October 11, 2016

Determining if Your Business is Subject to Nexus

The term “nexus” has become a hot topic in the business world. Nexus, also known as sufficient physical presence, is a legal term that refers to the requirement for companies doing business in a state to pay tax in that state.

Types of Nexus

Two different types of nexus exist: sales tax nexus and income tax nexus. A company might meet the requirements in a state for one, both, or neither. With sales tax nexus, a business must collect and remit sales tax on sales subject to tax in that state. With income tax nexus, a business must file income tax returns for that state.

Creating Nexus

Paying tax to the state you are physically located in is the easiest trigger for nexus. There are other situations creating nexus that make it more complicated to determine if a business is liable for collecting sales tax or paying income tax such as:

  • Having inventory, leased property, or employees in a state
  • Accepting or soliciting orders within a state
  • Delivery of product by company vehicles within a state
  • Related companies doing business within a state
  • Conducting seminars or classes in a state

Nexus is subject to each state’s particular taxing authority, making it a layered issue – varying from state to state. Along with different triggers that can create nexus, there are different types of nexus that states are looking at, outlined below.

Physical Nexus—if a company has employees, inventory, buildings, or equipment located in a state

Click Through Nexus—a remote seller (i.e. Amazon) meeting a minimum sales threshold in a state resulting from an in-state referral agent (i.e. online ads)

Economic Nexus—a factor presence test such as property, payroll, or sales in a state or a combination of the three

Substantial Nexus—if a business has a significant connection to a given state, the state may impose its taxes on the business

Ground Hog Nexus—if a state can see a company conducting business in its state, the state may inquire the company about nexus creation

Making Sense of Nexus

There are many different types of nexus and related triggers (even more than the above lists) making it difficult to have a handle on the vast number of rules. Legislation is going on federally and in various states to try and make it easier for companies to understand. For example, a federal bill was introduced in the House of Representatives titled the “Business Activity Tax Simplification Act of 2015.” The bill proposes to move the nexus issue from the state level to the federal level and make it uniform throughout the United States.

Upcoming legislation should help simplify the nexus headache, but if you have questions in the meantime or would like us to perform a nexus study for your company, contact an Anders advisor today.

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October 6, 2016

Meyer and Waitukaitis to be Named Partners at Anders

Anders is proud to announce that Jenny L. Meyer, CPA, MBA, and Jon K. Waitukaitis, CPA are being named partners of the firm, effective January 2017.

Meyer joined Anders in 1994 and most recently served as a Principal in the Tax Services Group. She works with closely held businesses and families on individual and corporate tax planning and financial statement preparation. Along with assisting clients in the specialized areas of estate and trust planning, she also concentrates on serving closely-held businesses, particularly in the manufacturing and distribution industries. Meyer speaks frequently to client and external groups about navigating tax law changes and provides advice on wealth building. She is a leader in the Anders Women’s Initiative which is dedicated to helping women thrive in their businesses and careers. She is also a sought-after mentor and coach to the young professionals at Anders and is dedicated to staff education and development.

Meyer holds a bachelor’s degree in accounting from Truman State University in Kirksville, Missouri. She earned her MBA at the University of Missouri – St. Louis, and is a Certified Public Accountant (CPA) in the state of Missouri. Meyer is a member of the American Institute of Certified Public Accountants (AICPA) and the Missouri Society of Certified Public Accountants (MSCPA). She has held many roles in her children’s school Parent Teacher Organizations and on the board of KidSmart-Tools for Learning. Meyer also serves as treasurer and board member of Girls in the Know, and is an active member in the Professional Women’s Alliance.

Waitukaitis joined Anders in 2003 and most recently served as Principal in the Audit and Advisory Services Group. He works extensively with closely held businesses in the manufacturing, distribution, not-for-profit and construction industries. He is also a member of the Health Care Group, specializing in financial statement audits, internal controls and in conducting specialized services for health care firms. Waitukaitis also has experience in fraud prevention, employee benefit plans and technology.

Waitukaitis holds a bachelor’s degree in accounting from Truman State University in Kirksville, Missouri and a master’s degree in accounting from Southern Illinois University – Edwardsville. He is a Certified Public Accountant (CPA) in the state of Missouri and Illinois. Waitukaitis is a member of the American Institute of Certified Public Accountants (AICPA), the Missouri Society of Certified Public Accountants (MSCPA), and the Illinois Society of Certified Public Accountants (ICPA). He is an active member of the Southern Illinois Chapter of Healthcare Financial Management Association (HFMA), and has served on the board of directors, program committee, and as sponsorship committee chair.

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October 4, 2016

Avoiding Capital Gains Tax due to Monsanto Merger

St. Louis recently learned of the potential merger of German pharmaceutical company, Bayer and St. Louis based agricultural company, Monsanto.  The cash payout for Monsanto shareholders could be $128 per share, but if you hold these shares in your portfolio with a low basis, you could incur significant capital gains when the merger is complete.

Avoiding Capital Gains Tax

Is there a way to avoid these capital gains?  The answer is yes.  You could donate this low basis stock to a charity.  When you donate these shares, you receive a charitable income tax deduction equal to the fair market value of the shares as long as you have held the shares for longer than a year.  You will not pay any capital gains tax on these donated shares.  This is great way to help out your favorite charities without incurring additional taxes.

In order to take advantage of this tax benefit, the Monsanto shares must be donated before the merger has been deemed complete.  Generally the merger must be at the point of no return with no contingencies to closing to be deemed complete.  You still have time, but listen closely to the news.  If you wait too long to donate the shares, you will be treated as making a sale and will have to pay the capital gains tax.

Contact an Anders tax advisor to see if this make sense for you.

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