July 29, 2020

Anders Named a 2020 Top Workplace by the St. Louis Post-Dispatch

The St. Louis Post-Dispatch has honored Anders as a 2020 Top Workplace. The Top Workplaces list is based solely on employee feedback gathered through a third-party survey administered by research partner Energage, LLC. The anonymous survey measures several aspects of workplace culture, including alignment, execution and connection. Anders has been on the Top Workplaces list several times, and was ranked at the top of the Midsize Employer Category in 2016 and 2017 and second place in 2018.

“Top Workplaces is more than just recognition,” said Doug Claffey, CEO of Energage. “Our research shows organizations that earn the award attract better talent, experience lower turnover, and are better equipped to deliver bottom-line results. Their leaders prioritize and carefully craft a healthy workplace culture that supports employee engagement.”

Attributes that make Anders a top workplace include the open, collaborative work space reflecting the culture of the firm, a generous PTO and benefits package, flexibility and extensive technical and professional training programs. Anders supports and encourages employees to follow their passions in the community, and provides development dollars to help them do so.

The complete list of Top Workplaces can be found in the August 2 issue of the Post-Dispatch. Meet the 2020 St. Louis Post-Dispatch Top Workplaces.

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July 28, 2020

How to Beat the Odds and Successfully Transition Your Family Business

If you want to find examples of failed family business transition plans, you don’t have to search very hard. Less than 30% of family businesses make it to the second generation, and a small fraction of those make it to third or fourth generations. While the odds may be against family businesses, a successful transition can and does happen with proper planning.

Potential Hiccups When Transitioning to a Family Member

Too often the founder of a family business stays in control too long and doesn’t involve the next generation in management decisions. Disagreements between siblings often arise when the second generation does not have insight into how their parents made decisions and their vision for the future. 

Other times, an unexpected illness or death accelerates the transition time from one generation to the other. The next generation may lack maturity and the skillset necessary to take over the business.

Creating a Successful Plan to Transition

Effective planning and implementation of a transition plan is key to making sure the family business survives and thrives. Future leaders should be designated and developed over time to give them the best chance of taking over the company. There are some steps business owners can take now to create a smoother transition.

Start the Conversation

Identify who will be part of the next leadership group and talk with them about it to make sure they see their future role in the company in the same way you see it.

Put Contingency Plans in Place

If a family member is unwilling or unable to run the business, is there a trusted third-party who can step in to fill the void, at least temporarily? Sometimes an outsourced CEO or other executive-level person can be brought in to fill a gap and help until the next generation is ready.  If you have a relationship with someone you think could fill a role like this, it may be worth discussing it with them now in case they are ever needed.

Begin Stepping Back

Involve the designated successors in decisions and start stepping away earlier than your retirement date so the next generation gets an understanding of what it takes to run the business. They get the benefit of having you available for guidance and support and can start to get comfortable with leading the company with a safety net.

Set Expectations

Establish responsibilities for siblings to help to control future disputes. Disagreements can always happen when siblings have competing goals and different management styles. However, when the first generation can lay out their vision, the sibling disputes can be lessened. Siblings have a plan to follow and can have some ideas to fall back on rather than struggle to find their roles and compete for the best way to move forward.

Put it in Writing

Document strategic plans, key relationships and other information that you know that would help in the transition. If you’re out unexpectedly, these resources can be invaluable and help prevent the successors from learning things the hard way.Planning for the eventual transition of the management of your business is key to the future success of the business. Having open, honest discussions with the individuals who will one day succeed you in the business can give your family business a greater chance of outperforming the current statistics. Anders Business Transition Planning advisors can help your family business configure a personalized plan to transition now or down the road. Contact an Anders advisor below to discuss your specific situation.

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July 27, 2020

Stock Up on School Supplies During Missouri’s Back to School Sales Tax-Free Weekend August 7-9

While “going back to school” may look different this year, the Missouri Back to School Sales Tax Holiday is a great time to stock up on supplies needed for remote or in-school learning. In Missouri, the tax-free holiday starts at 12:01 a.m. on Friday, August 7th and lasts through 11:59 p.m. on Sunday, August 9th. During this period, qualified purchases are exempt from sales tax. Be aware not all cities and counties in Missouri observe this holiday.

What items are exempt from sales tax?

In Missouri, items such as clothing, personal computers and school supplies are exempt from sales tax. Below is a list of popular items that normally qualify as fitting into one of these categories.

Clothing – any article having a taxable value of $100 or less:

  • Belts
  • Coats
  • Dresses
  • Gloves
  • Hats
  • Jackets
  • Leggings
  • Pants
  • Shirts
  • Shorts
  • Shoes or Boots
  • Socks
  • Tights

Personal Computers – not to exceed $1,500:

  • Desktop computers
  • Laptop computers
  • Tower computer systems
  • Keyboards
  • Motherboards
  • Mouses
  • Multimedia Speakers
  • Storage Drives
  • Tablet Computers
  • iPads
  • Monitors
  • Computer peripheral devices

School Supplies – not to exceed $50 per purchase:

  • Art supplies
  • Backpacks
  • Crayons
  • Calculators
  • Glue
  • Lunch boxes
  • Notebooks
  • Textbooks
  • Paper
  • Rulers
  • Scissors
  • Staplers and staples
  • Tape
  • USB flash drives
  • Writing instruments
  • Graphing calculators (not to exceed $150)

What items do not qualify?

  • Batteries
  • Facial tissues
  • Umbrellas
  • CD players
  • Furniture
  • Copiers/office equipment
  • Headphones
  • Watches
  • Sporting equipment
  • Fixtures
  • Envelopes
  • Power strips
  • Watchbands
  • Telephones

Which states does this apply to?

This holiday is recognized in Missouri, Arkansas, Florida, Iowa, New Mexico, Ohio, Oklahoma, South Carolina, Virginia and Wisconsin. However, you do not have to be a resident of one of these states to benefit from the sales tax holiday.  Other states listed above may be on different dates and may include other items and not include some items listed above for Missouri.  Be sure to check each state’s date and qualifications.

Do items purchased online qualify for the sales tax exemption?

Yes, if the purchase is made of the qualifying items during the holiday then online purchases qualify. Delivery can occur after the holiday if the purchaser pays in full during the sales tax holiday.

The Back to School Sales Tax Holiday is a great way for people to stock up on school supplies while avoiding to pay sales tax. For more information on this holiday visit the DOR’s website.

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July 24, 2020

PPP with Paul and Dan Video Series

With new updates and legislation evolving quickly around the Paycheck Protection Program (PPP), our CARES Act Research and Response Team has been focused on relaying information you need to know. Two of the team members, Paul C. Rhea and Daniel K. Schindler, are sharing the latest changes around PPP loans and the forgiveness process in their video series: PPP with Paul and Dan.

View each segment of the series below. Check out more CARES Act content in our COVID-19 Resource Center, or learn how we can help your business recover from COVID-19.

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July 21, 2020

Why Hiring Top Talent Remains a Critical Priority for Every Business

The word “unprecedented” has been used more than ever in the last several months. It has described the rampant spread of the virus, the burden on businesses, the astronomical unemployment numbers and the record number of people working remotely. Businesses have had to shift the way they operate and how they hire and retain employees.

A big push initially was to get companies to retain their staff through Paycheck Protection Program (PPP) loans. Despite those efforts, millions of people suddenly found themselves unemployed. While COVID-19 certainly shook things up, was the economy “unprecedented” even before COVID-19?

Weathering the Storm with the Right Team

Remembering back to pre-pandemic days, the market was incredibly short on talent. Companies were having a real challenge finding skilled talent to maintain the incredible growth and success they were experiencing. Many would say a lot of what was happening then was unprecedented too, such as historically low interest rates, unemployment rates and high demand for goods and services.

Things certainly changed fast, but during that time, we did not magically grow more skilled talent. As we get back on track, customers will come back and companies will need those talented employees again. With the speed of business today, decisions must be made faster in good times and bad. Companies need teams that can help get things done quicker and smarter while being able to pivot at a moment’s notice. The biggest challenge of all may be the fight to find and retain the best people to help weather these fast-moving storms we are likely to see again.

The old model was to lay off and rehire. With a baby-boomer induced short supply, that strategy isn’t an option anymore. It makes more sense to keep the employees you have already trained and developed. Finding and retaining skilled talent should be a higher priority now more than ever.

Finding the Talent You Need

Searching for the right candidate in a sea of resumes can be nearly impossible, especially when you’re focusing on how to get your business past a pandemic. Instead of waiting for your next employee of the month to knock on your door, our talent advisors can bring them to you. Anders Talent works with businesses to make hiring the right accounting person seamless. We can handle everything from interview coordination to offer and acceptance negation and everything in between.

Anders Talent can help you attract and find the best people to match your business’s unique needs. We are in touch with the demand for finance and accounting talent and can help you navigate today’s hiring and recruiting processes. Learn more about Anders Talent or contact an Anders advisor below to learn more.

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July 16, 2020

How Labor Unions Can Benefit from the CARES Act

The CARES Act enabled various relief programs for business and exempt entities. While some of the provisions for not-for-profits were limited to 501(c)(3) charitable organizations, there are several provisions labor unions can take advantage of. Below we dive into the benefits available for labor unions.

Paycheck Protection Program (PPP) Loans

Unfortunately, the union itself will not be eligible to apply as the program is limited small businesses and to 501(c)(3) charitable organizations. For most unions, PPP loan funds will only be available for payroll dollars in a 501(c)(3) training fund. These loans are administered by banks and have forgiveness features if the loan is spent on qualified expenses.

Economic Injury Disaster Loan (EIDL) Program

Unlike the PPP loans, the EIDL program is open to all types of exempt organizations, including labor organizations. This loan program is based on the architecture of the SBA’s existing 7(a) loan program and will make forgivable loans of up to $10 million available to qualifying organizations. It’s important to note that organizations that qualify and accept the EIDL funds through the SBA would not be able to receive the PPP loan for the same purpose.

Employee Retention Credit Program

The employee retention tax credit is also available to labor organizations, and is most beneficial to those with fewer than 100 employees, as the credit is reduced after 100 employees. Qualified employers are allowed a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee. This credit is administered by the union’s payroll processing, and the credit is taken on future payroll tax filing.

Employer Payroll Tax Deferment Program

The CARES Act allows employers to defer deposits and payments of the employer’s portion of social security taxes. All businesses, including labor organizations, can defer 50% of employer’s share of FICA payroll taxes until December 31, 2020. It’s important to note that employers that received a PPP loan may not defer the deposit and payment of the employer’s share of social security tax that is otherwise due after the employer receives a decision from the lender that the loan was forgiven. Employers who have received a PPP loan that has not yet been forgiven are still eligible for the deferral.

Tax Credits for Paid Sick and Paid Family Medical Leave

Generally, employers who employ between 50 and 500 employees are required to pay emergency family and medical leave. The required paid sick leave is up to 80 hours for full-time employees and expanded medical leave requires payment for 12 weeks, allowing the first 2 weeks to be unpaid. There is the capability to take a credit against payroll taxes being paid for amounts paid under the extended sick leave or family medical leave program.

Protection From Future Actions Against Unions

Under section 4003 (c)(3)(D)(i)(VIII)&(IX) of the CARES Act, any company that received a PPP loan:

  • Will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan.
  • Will not abrogate existing collective bargaining agreements for the term of the loan and 2 years after completing repayment of the loan.
  • Must remain neutral in any union organizing effort for the term of the loan.

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential impacts and benefits. Visit our COVID-19 Resource Center for more insights or contact an Anders advisor below to learn more about eligible relief programs.

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July 14, 2020

Why Companies Need to Reevaluate Internal Controls in the New Normal Work Environment

As stay-at-home orders and social distancing have shifted the workforce in many ways, companies are left with many changes to their accounting and financial reporting environments. Many of these changes were expected, but some changes may have unintended consequences. Pre-pandemic policies were designed to set up effective and efficient controls. However, the controls that were designed may not be effective, or even applicable in the current environment. These changes present the perfect opportunity for management to reevaluate their control environment, begin assessing and updating the risks that lie within that environment, and redesign their policies and procedures.

How to Assess Your Internal Controls

The first and most important step in the process will be assessing where risk lies within the accounting and financial reporting systems. Management should consider where and how fraud or misstatements could occur. Once management knows where the potential risks are, management can insert the needed controls to deter and reduce those risks.

Segregation of Duties

One of the strongest ways to reduce risk is to achieve segregation of duties. This separates the physical custody of assets, record-keeping of the transactions, and authorization of transactions. Under the new normal, segregation of duties may have some barriers that need to be overcome. There are many resources that are available to help achieve better segregation of duties. One example would be using a lock-box to accept deposits. Once the receipt is entered into the lock-box, the accounting department can record the deposit, without having physical custody of any cash or checks. On the cash disbursement side, there are tools such as Bill.com or positive pay to ensure the vendors you want to pay are actually paid.

Strengthen Review Process

Another key control in the internal control environment is review. This can range from the review of KPIs, review of check support, review of bank reconciliations, or financial statement review. However, the review process is only as good as the reviewer. Too often, someone is going through the motions of the review, mainly as they are not exactly sure what they should be looking for. It is key that the reviewer has proper expertise or training. For example, while reviewing the bank reconciliation, they should review the list of payments, outstanding checks and other reconciling items and any other transactions that hit the cash account and reconciliation. The person tasked with the review should be familiar with the company’s vendors so they would recognize any irregular payments.

Electronic Approval

For many companies, some degree of remote work may be permanent. The amount of physical paperwork that circulates through the office may be significantly reduced, thus the approval process will look differently. Where old procedures would require formal written sign offs, such as initials on the bank reconciliation or signature on the support for cash disbursements, there may not be hard copies of these items to sign with a formal sign off. This is where electronic approval may replace old, hard copy approvals. It is important to note in the electronic approval what was reviewed and what is approved. This can take the form of an email approval to the appropriate personnel, or utilization within various softwares, such as DocuSign.

The workforce will continue to evolve over the next year, and each evolution should bring new considerations to the control environment. As mentioned above, the first important step is to assess the risk environment. This will be a continual process that management can implement into their daily processes. As each day brings about new changes, it is important to document and apply changes to the environment as they occur.

Our advisors are closely following COVID-19 relief efforts and will continue to publish insights to keep you informed about potential business impacts and benefits. Visit our COVID-19 Resource Center for more insights or contact Anders below to discuss how we can help you adjust your internal controls.

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July 7, 2020

How to Turn A Great Idea into a Startup Business

As an entrepreneur, when you have a great idea, it can be exciting to get a new business started right away. But to make sure the startup is set up for success, there are necessary steps entrepreneurs need to take. Proper planning up front by creating a business plan, building a great team and developing a financing strategy will help turn a great idea into a profitable business.

Create a Business Plan

The first step is to create your own business plan. The business plan could originally be for yourself to help you build out your strategy on paper. The business plan could also be for external investors or other business partners down the road. Deciding who you are making the business plan for is a key step.

The final business plan that you create should contain your business’s key goals and how you plan on achieving those goals. Key areas of your business plan should include:

  1. Business Description
  2. Company Analysis
  3. Industry Analysis
  4. Marketing Plan
  5. Plan for Operations
  6. Financial Plan

Your business plan should come together as a quality, professional document. This plan will likely be referenced by outside parties and is key in helping you achieve your goals. The plan can and should evolve as you are working your way through developing your business.

Build a Team of Advisors

The next important step is building a team that can help advise you. Having a CPA and an attorney that are the right fit for you and your business can go a long way. Make sure your business culture meshes with their culture and values and that you can trust them. Both your attorney and CPA will be there to answers your questions, so knowing that they have your best interests in mind and that you are able to count on their advice is important.

An attorney can help draft up agreements, copyrights, patents, or other legal documents that might be needed, and a CPA can help you choose the proper business entity type that will best suit your needs as well as helping with accounting and bookkeeping throughout operations. As your business grows and becomes more complex, so does the accounting as well as potential legal issues. Make sure your CPA and attorney are have your goals in mind.

Next Steps and Financing

Once you have your plan and your team in place, there are now decisions and steps to take that both your attorney and CPA can help with.

  1. Select your business entity. Whether you form your business as a Sole proprietor, S-Corp, C-Corp, LLC or Partnership, each entity type has different tax and legal factors, so choosing the one that best suits your business is important.
  2. Register your business with your state.
  3. Request and obtain Federal and State identification numbers.
  4. Open a separate business bank account.
  5. Choose an accounting and recordkeeping software.
  6. Depending on your industry, consider purchasing general liability insurance.

A final step before being able to operate your business is obtaining proper financing for the operations.

Equity Financing

Equity financing means exchanging part of your ownership for cash. The positive of this option of financing is there are no interest payments that need to be made. This can be a very beneficial way to preserve cash when initially trying to get up and running. The downside is the loss of ownership which results in less earnings being distributed to yourself.

Debt Financing

A debt financing structure means borrowing money that will be repaid with interest. The positive of this way of financing is there is no lost equity in your business as well as the interest and principal payments are consistent and can be planned for. The downside is the interest that is to be paid as every bit of cash can be important when starting a business.

Owner Financing

Financing the business on your own is the most lucrative since there is no equity lost and no interest to be paid. However, many entrepreneurs will not be able to sustain the cash flow required to keep the business going, and will eventually require funding from debt or equity financing.

You have your plan, you have your team in place, and you have financed your business. You are now ready to begin operations and turn your dream idea into a reality. Throughout operations, continue to consult with your CPA and attorney as they can provide valuable advice every step of the way. Contact an Anders advisor to discuss your new business, or learn more about the Anders Startup Group.

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July 6, 2020

David Hartley Inducted as 2020-2023 MOCPA Board Member

David E. Hartley, CPA, CISA, Anders Partner and Director + Advisory, was sworn in as a Member of the Board of Directors for the Missouri Society of Certified Public Accountants (MOCPA) for a three year term effective July 1, 2020.

About David Hartley

Dave has been an active member of the MOCPA throughout his career. Most recently, he has held leadership positions in the organization as an Educational Foundation Board Member and a Transformation Committee Member since 2019.

As a partner and the Director of Advisory at Anders, Dave has over 25 years of experience in C-suite leadership roles and consulting with privately-held businesses on technology planning and enterprise risk services. He has experience defining the technology strategy and roadmaps for middle market businesses. At Anders, Dave oversees the strategy of the firm’s advisory services practice, identifying areas to enhance existing services and expand into other areas. A former Chief Information Officer (CIO) for a St. Louis-based public company, Dave participates in various CIO knowledge-sharing and collaboration forums and frequently offers his thought leadership at industry conferences and in publications.

About the MOCPA

Established in 1909, the Missouri Society of Certified Public Accountants (MOCPA) is the premier professional development organization dedicated to CPAs in Missouri, representing more than 8,000 members in public practice, industry, government, and education.

Membership in MOCPA provides a professional advantage by enabling CPAs to stay current on rapidly changing technical issues, improve the quality of their work, and advance their careers.  In turn, MOCPA members carry this advantage on to the individuals and businesses they serve.

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July 2, 2020

Did You Miss the Perfect Time to Sell Your Business?

Stockholders have been on a rollercoaster for much of 2020. The market was chugging along pretty nicely, continuing its steady and calm rise we saw from 2019…then COVID-19 hit. The Dow Jones at one point lost more than 38% in less than 40 days. Followed by market uncertainty and wild swings, the average investor was left reeling. Valuations of privately held business have also been turbulent. For the second quarter of 2020, we expect to see the average profit multiple decrease for the first time in many years.  

Have I missed the opportunity to sell my business at the peak?

The answer to this question is: maybe. But should you care? Probably not. The thing many of us forget is that when you sell your company, possibly your largest asset and the biggest wealth-creating event of your lifetime, you have to do something with the money you make.

These days, that means you’ll have to turn around and invest your windfall into an asset class that is arguably somewhat bubbly in historical terms. The current stock market is unsettled. The price of residential real estate has been continuously growing in many major centers, but what will the future hold? The near-term expectations for commercial real estate are murky, with many companies realizing their workforce may not need the typical office space anymore.

How will all of these aforementioned realities affect your decision to sell or hold on to your business? Perhaps a look at recent history can shed some light on this difficult decision.

How does market timing affect the sale?

Let’s look at a hypothetical example. Two imaginary business owners are each running a company generating a pretax profit of $500,000. Rebecca sold her business during a down year, say 2015, for 3x her pretax profit. She would have walked away with $1.5 million pretax to invest in the stock market.

Now let’s imagine business owner Scott, who decides to try and time the market. Scott waited out the downturn and sold his business at the end of 2017 for 4x pretax profit, walking away with $2 million before deal costs. At first glance, Scott looks like the winner because he sold at the peak and got 4x profit instead of Rebecca’s 3x. But when we take a closer look, Rebecca would be better off today. Assuming she had invested her $1.5 million in the stock market, she would now have roughly $2.125 million based on the Dow returns for 2017 and 2018 of 13.4% and 25.0%, respectively. 

What should I focus on instead of economic timing?

Timing the sale of your business on the basis of external markets is often a zero-sum game, because unless you’re going to hide the proceeds of a sale under your mattress, you’re probably buying into the same market conditions from which you’re selling out.

A better approach is to optimize your business against the eight things acquirers look for when they buy a business, regardless of what’s happening in the economy overall. Those eight key drivers of company value are:

  • Financial Performance
  • Growth Potential
  • Switzerland Structure
  • Valuation Teeter-Totter
  • Hierarchy of Recurring Revenue
  • Monopoly Control
  • Customer Satisfaction
  • Hub and Spoke

To many business owners, these drivers, without explanation, seem confusing at best. To better understand their meaning and to find out how you score on the eight factors that drive your company’s value, we are pleased to offer access to the Value Builder questionnaire. Learn more about Anders Business Transition Planning or contact an Anders advisor to find out how to add value to your business before selling.

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