July 30, 2019

Selling Your Business to a Financial Buyer or a Strategic Buyer

If you decide to sell your business to an outside acquirer, you’re going to have to decide between a financial and a strategic buyer—understanding the different motivations of these two buyers can be the key to getting the best price for your business.

Financial Buyers

Financial buyers are mostly considered to be investors who are interested in acquiring your future earnings stream. They are willing to invest in almost any type of business or any industry as long as the company is generating a cash flow stream that is attractive to them. Because financial buyers are usually investors and not operators, they want you and your team to stick around, so they rarely buy all of a business. Instead, they buy a chunk and ask you to hold on to a tranche of equity to keep you committed.

They will value your business based on the amount of earnings it is likely to make and how reliable that earnings stream is. The buyer will be willing to pay more for your company if you can show them a consistently high earnings stream.

But there is a limit to how much they will pay, because financial buyers are playing the buy-low, sell-high game. They do not have a strategic rationale for buying your business and they are simply trying to get a return on their investors’ money. They tend to buy small and mid-sized businesses using a combination of this investment layered on top of a pile of debt, and they want to buy your business as inexpensively as possible with the hope of flipping it five or ten years down the road.

Strategic Buyers

A strategic buyer is usually a larger company in your industry and they are valuing your business based on what it is worth in their hands. They are wanting to acquire your company to either expand horizontally or vertically, to eliminate the competition, or to acquire some intellectual property. They will try and estimate how much of their product or service they can sell if they added you into the mix. Because of their size, this can often lead to buyers who are willing and able to pay much more for your business.

Choosing the right buyer for your company depends on what you want out of the sale. Do you want to retain some control in the company? Do you completely want out and are looking for the highest price? The Anders Business Transition Planning Team can help you decide what type of buyer is best for you. Contact an Anders advisor to discuss your options.

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July 25, 2019

Common Myths Surrounding Economic Nexus in Missouri, Kansas and Florida

The passing of South Dakota v. Wayfair has raised many questions surrounding sales and use tax and whether companies are required to pay in certain states. After the Wayfair decision, many states quickly enacted economic nexus standards with reporting requirements. A select few states, including Missouri, Kansas and Florida, have yet to pass legislation, leaving businesses confused on their nexus responsibilities. To help clear up the confusion, below we cover the most common nexus misconceptions we hear from companies in Missouri, Kansas and Florida.

Myth #1: If I don’t have a physical location in Missouri, Kansas or Florida I don’t need to worry about sales or use tax in these states.

Before South Dakota v. Wayfair, the landmark case of Quill v. North Dakota provided that a company must have an actual physical presence in a state in order for a state to require an out-of-state business to charge that state’s sales tax. The case of South Dakota vs. Wayfair determined that physical presence is no longer needed to have “substantial nexus” in a state, as required by constitutional law. Currently, Missouri, Kansas and Florida do not have economic nexus statutes in place, although bills are being pushed through the legislature on this topic.

Myth #2: These states will never pass legislation around economic nexus if they haven’t done so already.

Although not every state has enacted statutes on economic nexus, the South Dakota v. Wayfair decision has already started a ripple effect resulting in many more states enacting economic nexus standards. If your business currently ships tangible personal property out of your home state, this ruling is more than likely going to affect you now or in the future.  It is important that companies track all sales made in each state to further determine if they do in fact have nexus in a jurisdiction where they are not registered.

Myth #3: I don’t have online sales, so economic nexus doesn’t apply to my business.

A common misconception of the South Dakota v. Wayfair ruling is that it only applies to online retailers with transactions in multiple states. While online retailers will definitely be affected, economic nexus applies to any sales, not just online. If a Missouri, Kansas or Florida company has sales outside of these states, it’s important to know the economic nexus thresholds and regulations in that state.

Myth #4: Economic nexus only applies to sales and use tax.

The South Dakota v. Wayfair ruling directly affects state and local sales/use tax collection for remote sellers, but the ruling may also impact state corporate income taxes and franchise taxes. States are revisiting their income tax nexus stances as a result of the ruling in regard to sales factor sourcing. Companies that do not have a physical presence in a state, such as employees, offices, facilities, etc., must look at the sourcing of their sales for purposes of the state’s sales factor to determine nexus.

The economic nexus regulations are continuously evolving in each state following the South Dakota v. Wayfair decision. Our State and Local Tax advisors are ready and available to help you remain compliant in all jurisdictions in which you are obligated to collect and remit tax. Contact an Anders advisor with questions specific to your business.

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July 23, 2019

Optimize the Revenue Cycle to Increase Profit without Adding Patients

Some health care organizations believe that increasing the number of patients walking through the doors is the surest way to see an increase in revenue. While this is one way of increasing profit, there are several actions your organization can do to optimize the revenue cycle and increase revenue before the patient is seen.

Scheduling the Appointment

Under most circumstances, the initial contact an office has with the patient is over the phone while scheduling an appointment. Developing telephone scripts for office staff is essential to ensure that all necessary information is collected at this time. Make sure these scripts follow the sequence of the practice management system so information can easily be entered. Collecting all required information up front enables you to perform patient eligibility verification, receive appropriate referrals if necessary, inform patients of their financial responsibility such as deductibles, co-payments, and coinsurance, all prior to the office visit.

Hours of Operation

Another factor impacting the bottom line that should be evaluated is your hours of operation. Is your first appointment at nine in the morning and your last appointment at three in the afternoon? If so, you might be limiting yourself to a smaller patient population, and excluding those who work nine to five and are unable to schedule an appointment during those times. Consider implementing extended office hours one evening a week to accommodate those patients unable to schedule a visit during the day.

Claims Process

Although all office visits for the day are complete, the revenue cycle continues. Another element impacting revenue includes charge entry and claims submission. It’s a best practice for office charges to be entered within one day and for hospital charges to be entered within two days of receiving all necessary information, such as, operative notes and demographics. This is typically an area where lost charges can occur, and by preparing a monthly reconciliation, these lost charges can be decreased or eliminated.

When it comes to improving your revenue cycle, it’s essential to evaluate your key indicators to determine which areas are in need of additional attention and concentration. The beginning process of obtaining demographic information, eligibility verification, pre-certifications, authorizations, referrals, and entering charges can either accelerate or postpone the speed at which the organization receives its earned money. With effective internal processes, you can directly impact your revenue without increasing the number of individuals entering the practice. The Anders Health Care Group can help your health care organization identify opportunities and implement revenue cycle improvements. Contact an Anders advisor to learn more.

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July 23, 2019

Robert Willeford Published in the University of Missouri School of Law’s Business, Entrepreneurship & Tax Law Review

Robert V. Willeford, Jr., CPA, Esq., Director + State and Local Tax at Anders, was published in the University of Missouri School of Law’s Business, Entrepreneurship & Tax Law Review (BETR) Volume 3, Issue 1.

The publication, Cross Border State Sales and Use Taxation After South Dakota v. Wayfair: A New Paradigm for E-Commerce, was collaboratively written by Norman S. Newmark and Rochelle Friedman Walk of AEGIS Law and Robert V. Willeford, Jr. of Anders. The article summarizes state sales and use tax laws, prior Supreme Court precedent, and the South Dakota v. Wayfair decision.

The Business, Entrepreneurship & Tax Law Review (“BETR”) is a student-edited publication at the University of Missouri School of Law whose primary purpose is to provide a three-part publication offering and host an annual symposium to cultivate cutting-edge information and legal analysis over a wide range of topics and issues. BETR’s purpose is to publish articles on developing legal matters that are relevant to practitioners, academics, and policymakers who continue to inform and shape our legal environment.

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July 22, 2019

Missouri Medical Marijuana License Applicants Must Include Plan for Accounting and Fiscal Controls

Voters passed Missouri Amendment 2 on November 6, 2018.  At that point in time, August 3, 2019, the date that Missouri’s Department of Health and Senior Services (DHSS) would begin accepting business license applications, seemed like a lifetime away. I think I can safely speak on behalf of our Missouri medical marijuana facility license applicant clients when I say that this time has flown by.

Our Cannabis Group regularly assists clients and their advisors on a variety of topics including understanding the business entity selection and structure process, selecting accounting systems, implementing internal controls, and navigating the complex tax rules of IRS Code Section 280E. With the August 3rd date looming for our Missouri applicants, we have been increasingly focused on assisting with drafting and refining various components of our client’s facility license applications.

Of the 68 questions that apply to “all applicants” the one that clients most frequently request our guidance with is Question 40 which states, “What is the plan for accounting, including but not limited to fiscal controls?”

How to Respond

As CPAs, we could, and often do, go into great detail when working with our clients on implementing their accounting processes and procedures, best practices, internal controls, etc.  But because DHSS specifically limits the answer to Question 40 to “up to 500 words”, we have worked to keep our guidance, for application purposes, as “high level” and concise as possible.  We have also developed a checklist of common questions for our clients to consider before responding to this question. A small sample of these questions include:

  • What is your process for selecting general ledger, point of sale, and inventory tracking systems?
  • What is your plan for implementing internal controls and other accounting best practices?
  • Have you hired an employee, or outside accountant, to maintain your books and records on a daily basis?
  • Have you engaged an outside provider to assist with reviewing the work of your in-house accountant?
  • What is your process for preparing monthly/quarterly/annual payroll, sales, and income tax filings?

The Anders Cannabis Group is here to help, whether it’s before filing your application or after. If you have questions about the Missouri medical marijuana facility license application, contact an Anders advisor.

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July 19, 2019

Proposed Accounting Standards Delay Could Affect Private Companies and Not-for-Profits

The Financial Accounting Standards Board (FASB) voted on July 17, 2019 to issue a proposal for public comment that would delay some of its major accounting standards, including leases, for private companies, not-for-profits and small reporting companies.

The proposal would give private companies, not-for-profits and small reporting companies an extra year to implement standards recently created or amended standards related to credit losses, leases, and hedging standards. If approved, the effective date for the lease standards would get pushed back to calendar year 2021, giving another year for companies to get processes in place.

FASB is considering a revised philosophy on effective dates for private companies, not-for-profits and small reporting entities pushing their effective dates two years past the public company effective dates. FASB stated they would only do that for major standard changes.

How This Could Affect You

The proposed delay would give private companies and not-for-profits the benefit of learning how public companies are implementing the standards. Having more time in-between the two major standards would help these organizations take their time to have a quality implementation.

The proposal will undergo a 30-day public comment period in August. If the comments are generally favorable, the board will issue a final document. Anders routinely provides feedback and comments to FASB, AICPA, and other standard setters on proposals and exposure drafts that we feel will have an impact on our clients.

If you have any questions about the accounting standards implementation for your company or not-for-profit, contact an Anders advisor.

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July 18, 2019

How to Handle Criticism at Work

Have you ever heard someone say, “I welcome constructive criticism” and wondered how on earth they can feel that way? It seems a little unnatural that anyone would enjoy hearing someone tell them what they are doing wrong, or what they can do better. Humans naturally want to be lifted up and praised for their accomplishments, but everyone has to deal with criticism at one point or another and it’s an important part of career development. If you’re not the person who “welcomes” constructive criticism and you need a few helpful hints, we’ve got you covered.

Your Mindset and Listening

Assuming that the constructive criticism is coming at a scheduled time, such as a performance review or planned discussion, the first step to handling criticism well is going into the situation with a good mindset. Keep an open mind, try not to be defensive, and assume the person has good intentions and is not trying to hurt your feelings. This mindset will help you to be able to listen to what the person is saying, rather than racking your brain for excuses or arguments on how they are wrong. A helpful tactic is to repeat back to them what you believe they are saying to make sure the two of you are on the same page: “What I hear you saying is that I need to work on [blank]?” This way if you have misunderstood what they are trying to tell you, there is immediate clarification.

Have Empathy

It is easy to feel like the person criticizing you is being aggressive or unfair. Having empathy for the person and understanding that they may feel like they are being gentle or respectful when you don’t necessarily feel that way is important to keep the experience positive. Realizing that giving someone criticism is sometimes just as uncomfortable as receiving it will help you feel more empathetic and less attacked.

Don’t Take it Personally

Typically, your supervisor, or whoever is giving you constructive criticism, will not be attacking your character. If they are taking the time to speak with you candidly, then chances are they believe that you can do a better job or fix the issue. If you view criticism as help, it will be easier to appreciate it rather than let it offend you. If you find yourself feeling hurt, try to stop your gut reaction and respond calmly. After taking time to digest what the person criticized, you will probably be glad that you did not respond with your immediate feelings.

Always Say Thank You

No matter what the feedback is or how you feel about it, you should thank the person for taking the time to discuss the issue with you. This is the mature and appropriate response to receiving constructive criticism. The last thing you want is to be known as the person who cannot accept a critique at work because that makes you seem difficult to work with.

Doubting the Criticism

If you doubt the criticism you received, instead of rejecting it during the conversation, find a coworker who you trust and ask them if they agree with the assessment. This way you can know whether you just can’t see the issue in yourself, or if the criticism was unfair or incorrect. If you feel the need to clarify the issue directly to the critic, ask them to provide examples of the thing they are criticizing. If they cannot give examples of the issue, then there may not really be one.

Request Time to Follow Up

Receiving criticism means there is something that you need to work on. Both you and the person who gave you the criticism should want to plan time to follow up on your progress and improvement. Having this conversation can let you know whether you are on the right track or if you need to do anything different. Also, after putting time and effort into making changes, you will not want your hard work to go unnoticed.

Handling constructive criticism is a part of life, especially at work. It is best to prepare yourself to deal with it in a mature and productive way. Maybe, using these tips, you can even become someone who welcomes constructive criticism.

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July 18, 2019

Downtown St. Louis Construction Update: One Cardinal Way and Ballpark Village Phase II

The action on the diamond isn’t the only thing St. Louis Cardinals fans are watching this season. Located at the corner of Clark and Broadway in Ballpark Village and scheduled to open in summer of 2020, One Cardinal Way will be one of the most luxurious, amenity-rich apartment communities in the country. The 29-story, 297-unit tower will offer unobstructed views directly into Busch Stadium, as well as the Gateway Arch, Mississippi River, and St. Louis skyline.

One Cardinal Way is part of Ballpark village’s $260-million second phase expansion. Designed by Hord Coplan Macht, One Cardinal Way will be designed to meet National Green Building System certification and will feature high-end materials, expansive ceiling heights, state-of-the-art appliances, and parking within the building. The community will feature studio, 1-bedroom, 2-bedroom and penthouse apartment homes. Additionally, the first floor will include 10,000 square feet of restaurant, retail and lifestyle amenity space.

Work, Live and Play at One Cardinal Way

One Cardinal Way will also feature over 25,000 square feet of interior and exterior residential amenity space that rivals that of any luxury apartment or condo building in the United States including:

  • An expansive outdoor terrace with direct views into Busch Stadium
  • Infinity Edge Pool
  • Demonstration Kitchen
  • Club room featuring an indoor-outdoor bar and fireplace
  • Private Event Entertainment Room
  • Fitness Center
  • Conference Room
  • On-site dry cleaning drop off and pick up
  • Building sommelier
  • In-building parking
  • 24-hour lobby attendant and full suite concierge services

The 29-story luxury high-rise residential tower will feature 297 rooms. From one bedroom, to penthouse suites, it’s billed as luxury living with unbelievable views of the city, the icons and the ballpark. Rent starts at $1,435 and can run up to $7,965 per month. With leasing open now, those views can be seen in person or online.  There’s already a draw for people wanting to live, eat, and breathe Cardinals, and 30 percent of the units are already spoken for. Renters can walk through each unit online and navigate through interactive property maps, floor plans that features views of the St. Louis skyline and the Arch. Potential renters can get a glimpse of the highly-anticipated One Cardinal Way luxury apartments through a virtual tour.

The St. Louis Cardinals say they are excited to foster a complete Redbird experience and it’s a community the Cardinals are proud to see coming to life.  “For somebody just coming to the stadium it’s one thing but to have an actual place to hang out, and to live, and to work, and to play,” said Bill Dewitt III, President St. Louis Cardinals. “It’s a unique experience not a lot of sports teams can offer their fans.

The 700,000-square-foot Ballpark Village expansion includes a 10-story Class A office building, a 29-story, 297-unit apartment tower One Cardinal Way, a three-story retail building anchored by Onelife Fitness and a Live! by Loews hotel. PARIC Corp. is general contractor on the project.

Progress at Ballpark Village Phase II

Bill DeWitt III, President of the St. Louis Cardinals said recently, “The anticipation is building as the phase II construction progress continues on schedule.”  Crews broke ground on phase two of the project last July. Phase two of Ballpark Village in downtown St. Louis is about 18 months from being complete.

“I think one of the things that’s going to be really fun as the season progresses is we’re now really at that point where every week there’s something cool going up — glass goes up on a new floor or a building tops out or you add a floor to the apartments,” said Cordish Cos. Vice President of Development and Managing Director of Multifamily Development Nick Benjamin.

The four components of Ballpark Village’s second phase are planned to open in a staggered timeframe.  In April 2019, Vice President Paul Giacoletto said the office building was about 60 percent complete while the Onelife Fitness building was about 25 percent done. Meanwhile, he said the hotel and apartment building were about 40 and 35 percent completed, respectively.

The Pennant Building is topped out and glass is currently being installed, Giacoletto said. PwC, the building’s anchor tenant, is scheduled to move into the building in early September, according to Benjamin, who said additional tenants for the facility will be named soon. Onelife Fitness is planned to open before the end of 2019 while 216-room Live! by Loews hotel is expected to debut in the first quarter of 2020. The apartment tower is scheduled to open in summer 2020 and is currently about 30 percent leased, Benjamin said. That’s a figure Cardinals President Bill DeWitt III said signals fans’ anticipation about the expansion.The St. Louis Cardinals and their development partner, Baltimore-based Cordish Cos., are now pre-leasing units in their planned 29-story apartment building in Ballpark Village.

The Anders Construction Group stays up to date on the latest projects in our city. Stay tuned for more details on upcoming St. Louis construction projects.

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July 16, 2019

How Restaurants Can Utilize Bonus Depreciation and Section 179

Accelerating depreciation can provide large tax savings for restaurants and retailers following the Tax Cuts and Jobs Act (TCJA). Bonus depreciation and the Section 179 deduction allow taxpayers to take accelerated depreciation on certain assets, which can be a great tax planning opportunity to take advantage of. Below we dive into the details of bonus depreciation and Section 179, what type of property qualifies and any restrictions.

Bonus Depreciation

Under the TCJA, 100% depreciation is allowed for certain assets purchased between September 28, 2017 and December 31, 2022. Unlike Section 179, bonus depreciation can be used to generate a taxable loss. Taxpayers are not required to take bonus depreciation, and an election out of bonus depreciation can be a useful tax planning tool in the right circumstances.

Qualifying Property

To be eligible, property must be tangible personal property depreciated under the Modified Accelerated Cost Recovery System (MACRS) method with a recovery period of 20 years or less. This includes new or used property such as:

  • Restaurant furniture
  • Restaurant equipment
  • Land improvements

With some exceptions, Qualified Improvement Property (QIP) consists of improvements made to the interior of a restaurant that occurs after the building has already been placed into service.

Restrictions

QIP generally does not include restaurant buildings or improvements to the exterior of restaurant buildings. Under tax reform, QIP was not designated as either 15-year property nor as eligible for bonus depreciation. Currently, QIP does not qualify for bonus depreciation because it does not have a recovery period of 20 years or less. Until technical corrections are issued, QIP should be depreciated over 39 years or could be eligible for the Section 179 deduction.

Section 179

The Section 179 deduction is another useful tax planning tool that allows restaurants to take the total amount of depreciation of an asset in one year. Under tax reform, the maximum amount a taxpayer can expense increased to $1,000,000 with a phase-out limitation of $2,500,000.

Qualifying Property

Qualified real property now includes QIP and certain improvements such as:

  • Alarm systems
  • Fire protection
  • Roofs
  • HVACs

As we addressed above, only certain items are considered QIP, and the eligibility of such property should be evaluated before electing to take the Section 179 deduction.

In many cases, a restaurant or retailer should be eligible for either bonus depreciation or Section 179 on fixed asset purchases. Contact an Anders advisor with questions on how bonus depreciation and Section 179 can be used to your benefit, or learn more about Anders Lodging, Food and Beverage services.

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July 11, 2019

Anders Technology Announces Microsoft Gold Partnership

Anders Technology has earned the title of Microsoft® Gold Partner, the highest level in the Microsoft Partner Network. This partnership level is only awarded to the top 1% of providers worldwide, and Anders Technology is one of four Microsoft Gold Partners in the St. Louis area. To earn this partnership, five customer references must be submitted along with two business-focused competency assessments and a technical exam assessment.

As a Microsoft Gold Partner, Anders Technology Services can provide small to mid-size companies the highest level of expertise across all Microsoft 365 platforms including Azure, Office 365 and Power BI. “Earning the Microsoft Gold Partnership is an accomplishment that will greatly benefit Anders Technology Services clients. Our advisors can provide specialized resources and training on best-in-class technology programs and services offered by Microsoft, so clients can get ahead in their businesses,” explains Julia A. Deien, Solutions Architect in Anders Technology.

Learn more about Anders Technology.

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