January 30, 2018

Tax Reform Means Increased Giving but More Taxes for Not-for-Profits

With most of the press on tax reform focusing on businesses and individuals, it’s easy to assume that tax-exempt organizations are not affected by it. This is not the case, and there are several provisions that affect not-for-profit organizations. Below are the main provisions not-for-profits need to plan for.

Increased Charitable Deduction Limit

The good news is that beginning in 2018 the limitation on deductions for charitable donations is increased from 50% to 60% of a donor’s adjusted gross income. This may incentivize some donors to contribute more so they can claim the maximum deduction.

Employee Fringe Benefits Taxed

While the donation increase is great, there are also other provisions that make things more complicated and potentially costly for some organizations. Organizations that provide their employees with certain fringe benefits may be subject to unrelated business income tax (UBIT).  Taxable income will be increased by the amount that an organization spends on parking, transit passes and other transportation benefits for their employees. Expenses related to on-premise gyms or athletic facilities will also increase taxable income. This new rule only applies to those athletic facilities that are located on the organization’s premises, are operated by the organization, and are normally used by only employees of the organization and their families.

Excise Tax for Private Colleges and Executive Compensation

Also beginning in 2018, certain private colleges and universities will have a 1.4% excise tax imposed on their net investment income.  Additionally, a 21% excise tax is imposed on any organization with excessive executive compensation—typically any wages over $1 million, as well as excess parachute payments.

These new rules went into effect on January 1, 2018, so it’s critical to determine if any of the above circumstances pertain to your organization as soon as possible. Contact an Anders advisor for help with planning strategies.

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January 23, 2018

Better Construction Job Costing Leads to Better Financial Results

Job costing is the method of tracking and allocating all direct and indirect costs to individual construction projects. When applied consistently and accurately, job costing can help streamline the bidding process, act as a risk management tool and improve decision making.

Educated Bidding

To be competitive, a bid generally needs to be as low as possible, but as high as possible to stay profitable. Job costing can help management find the challenging equilibrium of a competitive yet accurate bid by providing a better understanding of project costs and profitability of previous jobs. An effective bidding process can prevent the company from bidding and winning a job only to find out later that their estimates were too low and the project will result in a loss.

Improved Risk Management

Minimizing project risks and surprises is critical in maintaining a profitable company. While it is impossible to foresee all problems and eliminate all risks, learning from past mistakes can help manage current and future jobs. Having accurate job costing allows management to assess the financial impact of problems encountered on previous jobs and determine the level of risk they are willing to take on a future project. Thinking through these risks ahead of time and building buffers where necessary can help prevent big hits down the road.

Informed Decision Making

Job costing provides more accurate financial information on individual jobs and company performance as a whole. This information allows management to better understand the current position of the company and future forecasts. It helps decision-makers identify changes in the market, recognize potential business opportunities and make strategic decisions about service areas. Management may also be able to anticipate future cash flow and funding needs before they arise. Together, these benefits can lead to improved profitability.

If you need help implementing a job costing system or utilizing information from the one you have in place, contact an Anders advisor or learn more about our Real Estate and Construction Services.

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January 16, 2018

Accounting 101 for Startups: Chart of Accounts

Accurate financial statements are vital to the health of a successful startup company. While accounting may not be the most glamorous part of a startup founder’s job, this blog series will break down the accounting basics into smaller, manageable pieces.

The first blog in this series focuses on the Chart of Accounts, and how they are used to generate a company’s financial statements.

What is the Chart of Accounts?

The Chart of Accounts is a listing of the names of accounts used to record transactions in the company’s general ledger. These accounts are assigned a category: Assets, Liabilities, Equity, Income or Expense. These categories are further broken down into sub-categories such as, Current Assets, Other Current Assets or Non-current Assets. The Chart of Accounts organizes these accounts by type.

What is this listing of accounts used for?

These accounts will be shown on your company’s financial statements, so it is essential to have enough accounts to provide the detail necessary, but not too many where the end user of the financials is overwhelmed.

Are all Chart of Accounts the same?

No, that would be too easy. The Chart of Accounts vary between companies and are designed to suit the specific needs of an individual company. While most companies will have an “Office Supplies” expense account or a “Checking” asset account, there are certain accounts specific to each industry. For example, a service-based company may have no use for Cost of Goods Sold accounts, but the Cost of Goods Sold accounts are essential to a manufacturing company.  Each business needs to determine specific items they want to keep track of. For example, to keep track of Administrative Salaries vs. Selling Salaries you would set up a separate account for each. The goal is to provide enough detail, but not too much detail where the financials end up unreadable because there is so much going on.

Do you have an example?

Sure do! Below is an example Chart of Accounts, separated by which financial statement they will ultimately appear on.

Balance Sheet

The Balance Sheet is an accumulation of all activity shown at a specific point in time, such as December 31. Compare this to the Income Statement shown below, which is for a period of time, January – December. Learn more about the Balance Sheet.

Assets: What the company owns of value

Current Assets – Can be quickly converted to cash if necessary

Checking
Savings
Accounts Receivable – Amounts owed to the company from customers
Inventory

Other Current Assets

Prepaid Expenses
Employee Loans

Non-Current Assets or Fixed Assets

Furniture & Equipment
Leasehold Improvements
Accumulated Depreciation: Fixed Assets have a useful life of more than one year. They are not expensed in the year purchased, instead they are depreciated each year until the entire value has been recovered or until sold

Other Assets

Intangibles

-Patents & Trademarks
-Organizational Costs
-Goodwill
-Accumulated Amortization: Same as Accumulated Depreciation, except these accounts are amortized each year
-Long-term Notes Receivable

LiabilitiesWhat the company owes

Current Liabilities

– Line of Credit
Credit Card Payable
Accounts Payable: Amounts you owe to vendors
Payroll Taxes Payable

Long-term Liabilities

Mortgage Payable
Auto Loan Payable

Equity = Assets – Liabilities

Equity is the value of the company determined by adding up all items of value the company owns and subtracting all items the company owes. Equity will vary based on the entity type, for example:

Additional Paid in Capital and Capital Stock – These both apply for C-Corporation and S-Corporation owners

Owner Contributions/ Distributions – Apply to LLC’s and partnerships. S-Corporations can also have distributions

Retained Earnings – Income is closed each year to the Retained Earnings account, which is used to keep track of earnings/losses of the company over time.  C-Corporations and S-Corporations utilize the retained earnings account

Partner Capital Accounts – These accounts are similar to retained earnings for LLCs and partnerships.  Each partners’ allocation of company income or loss, along with their contributions and distributions are consolidated into their capital account at the end of the year

Income Statement

The Income Statement, or Profit & Loss Statement, is used to show the company’s Net Income/Loss over a period of time: a month, quarter, year.  At the end of each year, the Net Income/Loss is closed to the company’s Retained Earnings account and the statement starts over fresh with the opening of a new year. Learn more about the Income Statement.

Income

Product Sales

Consulting Income
Returns & Allowances – will show as a negative number, reduces income
Discounts – will show as a negative number, reduces income

Other Income

– Interest Income
Gain on Sale of Equipment

Cost of Goods SoldDirect costs from the production of goods

-Purchases
-Materials & Supplies
-Freight

Expenses

-Advertising & Marketing
-Office Supplies
-Rent Expense
-Interest Expense
-Professional Fees
-Depreciation
-Amortization
-Travel

Other Expenses

Loss on Sale of Equipment

The Chart of Accounts can be an overwhelming concept. Thankfully, most accounting software packages generate the list for you based on your industry.  You can then customize the list to your specifications by adding, deleting or renaming accounts. Contact an Anders Advisor for help getting started. We have several templates available and can show you how to import our template into your software.

Check out the next post in the Accounting 101 for Startups blog series on Double Entry Accounting.

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January 16, 2018

Anders Startup Client Spotlight on Displays That Pay, LLC

Each month, we offer our startup clients the opportunity to share their story and showcase their business in our Startup Newsletter. This month’s featured emerging company is the caregiver display startup, Displays That Pay, LLC.

Name and company

Mark Rice of Displays That Pay, LLC

When did you start your business?

February 17, 2014

What inspired you to start your business?

In October of 2016 we made a pivot in our business strategy from trade shows and events to the healthcare market. Our primary target market is the growing population of more than 40 million caregivers seeking hi-tech assistance to help them reduce hi-touch caregiving activities.

In the past few years I found myself in the position of providing “hi-touch” caregiving activities to help both an elderly friend and my aunt. I quickly discovered that caregiving requires a critical balance of time, resources and relationships. I was challenged with my caregiving activities and began to use our display service to keep my loved ones informed of important activities including appointments, reminders, visits and life events. I discovered that I could still be near to my loved ones and, at the same time, extend the reach of caregiving activities through our display technology.

What city are you based in?

St. Louis

What is your product or service?

MyCare Displays – a simple, safe and secure solution for caregivers to extend their reach to loved ones.  By reducing the time to be present with their loved one, caregivers can get back time, rest, recharge and focus on work, family and relationships.

What sets your product or service apart from the competition?

This is the first secure, personalized display service that is available for caregivers, home health agencies and long term care/assisted living facilities. A secure digital tablet is used as a personalized patient portal so caregivers can push reminders related to medication, appointments and home health activities.  The display can be run in “interactive mode” for loved ones that wish to use specific apps or in “kiosk-mode” that provides a locked down single app display.

What is the best business advice you ever received?

Never underestimate the power of packaging, persistence and passion. If one approach or idea is not accepted (that you feel passionate about), repackage it and present it again with a different pitch.

Is there anything else you would like to share about your business?

We are a Verizon Solutions Partner which enables us to provide affordable internet service over cellular connections to residences or facilities where there is restricted or no Wi-Fi.   We have also teamed up with HIPAA Complete, another T-REX company, to provide HIPAA-compliance in the design and delivery of our MyCare Cloud display service.

As cybersecurity is a growing issue in healthcare, we have partnered with HIPAA Complete to launch a Healthcare Hackers webinar series.  Participants can learn practices and procedures from experts in the industry to prepare and protect their facilities from malicious hacking activities.  You can learn more and register at http://healthcarehackers.displaysthatpay.com/.

What is your favorite thing to do outside of work?

Enjoy watching old movies with my spouse, play guitar in our church choir, compose music, be a caregiver for loved ones, walking my dog in the park.

If people want to learn more about your startup, where should they go?

https://www.facebook.com/mycaredisplays/

 

 

 

 


If you would like your startup company to be considered for an Anders Startup Client Spotlight, please complete our questionnaire.

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January 15, 2018

The Right Outsourced CFO Solutions for Your Business

Growing companies require more sophisticated accounting processes, financial reporting, and planning services. Existing team members need to become more effective. Hiring an internal Chief Financial Officer (CFO) to manage and adapt to these changes can involve costs beyond just salary, including investments in necessary resources, software and training. Outsourcing CFO responsibilities can be a cost-effective way to get the financial advice and solutions a business needs. To help determine if outsourced CFO services can be of value to your business, below is a list of key questions to consider:

  • Are you considering replacing or adding a full-time CFO, but can’t quite justify the expense?
  • Are you needing more real-time financial information to make critical decisions?
  • Are you shifting leadership to focus on business operations rather than daily tasks?
  • Does your accounting department need further training and guidance?
  • Are you ready to understand your position in the market through benchmarking strategies?

If any of the above questions resonate with you and apply to your business, outsourcing your CFO processes may be a great solution. From wading through insurance forms and leases, to being a voice of reason when faced with a tough decision, Anders Outsourced CFO Services can provide answers and options with knowledgeable financial insight on your company.

Outsourced CFO solutions for your business

  • Fewer surprises and more control over your bottom line
  • Help with business plans, processes, and strategies
  • Assistance with budget preparation and long-term planning
  • Improved processes and quality control
  • Assistance with cash management
  • Consultation on systems selection and implementation consultation
  • Appropriate benchmarking strategies
  • A liaison with your banker, attorney, insurance agent and vendors
  • Mergers and acquisitions advice

Outsourcing CFO responsibilities allows you to focus on the areas of your business you do best while giving you peace of mind knowing that your CFO is looking out for your company’s best interests. Interested in learning more? Visit Anders Outsourced CFO Services or contact Anders.

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January 11, 2018

Anders Selects Angels’ Arms as 2018 Charity of Choice

Anders partners and staff have selected Angels’ Arms as the firm’s 2018 Charity of Choice. Now in its 13th year, the Charity of Choice program combines fundraising activities and volunteer efforts to support one local charity each year. Charities are submitted by members of the firm, and all members of the firm, from interns to partners, have the opportunity to vote for their choice at the firm’s meeting each January. In 2017, Anders raised more than $20,000 for Shriners Hospitals for Children – St. Louis.

Anders partner and Angels’ Arms Board Member Chris Madison nominated the organization along with Junior Board Members, audit supervisor Jennifer Gebhardt and audit senior Stephanie Jones. Angels’ Arms is dedicated to providing and supporting loving homes for foster children by keeping brothers and sisters together within a nurturing family until a forever home is found. Although in existence only since 2000, Angels’ Arms has changed the lives of over 400 children, including over 100 sibling groups, by providing them with a loving home and allowing them to thrive in a happy, functional family setting.

While activities such as Pick Me Up Carts, volunteer days and a shuffleboard tournament are held throughout the year, the first major Anders fundraising event will be the annual “Hoops for Hope” NCAA basketball pool, which draws participation from clients, colleagues, referral sources and friends of the firm from all over the country.

In addition to Angels’ Arms, other beneficiaries of the Anders Charity of Choice program have included Shriners Hospitals for Children – St. Louis, Stray Rescue of St. Louis, Friends of Kids with Cancer, Basket of Hope, Young Friends of Habitat for Humanity, Nurses for Newborns, Girls on the Run, St. Louis Crisis Nursery, Lafayette Industries, KidSmart, Re-Building Together and Kids Under Twenty-One (KUTO). Anders has raised over $275,000 in the past thirteen years.

Learn more about Angels’ Arms.

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January 11, 2018

Manufacturers Indicate Optimistic 2018 in LEA Outlook Survey

For the second year, Anders has teamed up with the Leading Edge Alliance (LEA) to jointly release the results from the 2018 LEA National Manufacturing Outlook Survey.

More than 450 manufacturing executives participated in the survey from a variety of industries including industrial, machining, transportation and automotive, construction and food and beverage, among others.

Optimism is high as manufacturers’ responses indicated they have a more positive outlook about the economy for 2018 than in 2017. The growing U.S. and global economies, rising energy and commodity prices and improved business and consumer confidence support this positive outlook.

Survey results for 2018 include:

  • 81% of manufacturers believe their revenue will increase in 2018, with 72% eyeing organic growth in the U.S. as their primary opportunity to increase sales
  • Manufacturers are more optimistic about the regional and national economy than the global economy, yet notably, the optimism rating for all three has increased by  more than 10 points since the 2017 outlook
  • 62% of manufacturers expect their sectors to grow, more than doubling the 2017 outlook. Food and beverage and construction materials cite the highest optimism for sector growth
  • Manufacturers’ top three priorities are growth sales, cutting costs and addressing the talent gap
  • More than half of survey participants cited the labor shortage as the greatest risk or barrier to growth, and more than half of manufacturers expect to increase hiring
  • Respondents plan to utilize technology to reduce risks and build a competitive advantage. 75% said that they will investigate or prioritize cybersecurity in 2018, and 50% will focus on Big Data/ERP/IoT

Leading Edge Alliance - St Louis CPA Firm

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Despite the improved outlook, hurdles remain. The dichotomy of growing sales while cutting costs may also present a challenge. Through all the potential changes, working with a team of industry-experienced advisors to provide insight and answers continues to be critically important. Please contact an Anders advisor with any questions, or learn how our Manufacturing and Distribution services can benefit your business.

Complete the form below to receive a copy of the LEA Manufacturing Outlook Survey results.

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January 9, 2018

How Hospitals Qualify for Not-for-Profit Tax-Exempt Status

To qualify as a not-for-profit, tax-exempt hospital, there are a number of requirements that must be followed under IRS section 501(c)(3). The Affordable Care Act added even more requirements through section 501(r), stating that hospitals must be able to show the benefit it brings to the community through a community health needs assessment.

Section 501(r) requires tax-exempt hospitals to satisfy the following requirements:

  • Conduct a community health needs assessment (CHNA) – A CHNA must be conducted every three years and include an implementation strategy to meet the community health needs listed in the assessment. This information must be publicly available.
  • Establish a financial assistance policy (FAP) – A written FAP must include
    • Eligibility criteria for financial assistance and free or discounted care
    • Basis for calculating amounts charged to patients
    • Method for applying for financial assistance
    • Actions the hospital may take in the event of non-payment
    • Measures to widely publicize the policy in the community served
  • Implement limitations on charges – The hospital must implement limits on charges for emergency or other medically necessary care provided to individuals eligible under its FAP. These limits cannot be more than those charged to patients with insurance.
  • Enforce a collection policy – The collection policy must require the hospital to make “reasonable efforts” to determine if the patient is eligible for financial assistance before taking “extraordinary collection actions”.

Not satisfying the above requirements provides grounds for the IRS to revoke the organization’s tax-exempt status under section 501(c)(3).  The IRS is currently auditing hospitals for compliance and has already revoked one organization’s tax-exempt status for not fully complying. For questions on how your organization can apply or comply to section 501(c)(3), contact an Anders advisor. Learn more about the Anders Health Care Group or Not-for-Profit Group.

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January 9, 2018

Anders Names Michael Stafford Chief Operating Officer

Michael R. Stafford, CPA has been promoted to Chief Operating Officer at Anders.

Mike joined Anders in 2016 as Director of Finance and Administration with over 20 years of CFO experience. In his role, he provides strategic financial direction to benefit profitability, growth, operations and business strategy, and also provides managerial direction to the internal accounting staff. Mike’s experience working for an internal audit and consulting firm and knowledge of the health care and legal industries, mixed with his analytical, strategic mentality, gives him the ability to understand all aspects of the business and make sound financial decisions. As the COO, internal functions such as finance, human resources, internal technology and administrative staff will report up through Mike.

A Certified Public Accountant, Mike is a member of the Missouri Society of Certified Public Accountants (MOCPA) and American Institute of Certified Public Accountants (AICPA). He holds a B.S. degree in Accountancy from the University of Missouri – Columbia.

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January 9, 2018

Anders Promotes Jason Gotway to Solutions Architect

Jason N. Gotway, VSP5, VMTSP, VCP550, VCP6, has been promoted to solutions architect in the Technology Services Group at Anders.

Since joining Anders in 2006, Jason has supported Enterprise clients’ virtual and physical networks while providing virtualization and data center support. He has significant experience in software and network administration support, and is knowledgeable about VMware. Launching his career in a helpdesk role put him in the real time, real-world situations necessary to be successful. Today, he draws upon that experience to provide clients with an optimal environment to work in, whether in the office or at home.

Jason holds a BS in Computer Management and Information Systems from Southern Illinois University – Edwardsville. He also holds several certifications including VMware Certified Professional in Data Center Virtualization, VMware Sales Professional 5, VMware Technical Sales Professional, and VMware Certified Professional 6 in Desktop and Mobility.

Jason has experience presenting on virtual desktop benefits, using desktop in the cloud and cybersecurity health.

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