Fraud Alert: Identity Theft Fraudsters Targeting Small Businesses

In recent years, we have seen a marked increase in the amount of identity theft cases due to our increased use of the internet. Generally, as tax professionals we mainly see the impact on individuals from these schemes. However, there is an surge of small businesses being targeted now.

The Journal of Accountancy recently posted an article regarding this increase. The article highlights signs that you may have been a victim of identity theft and provides information on the ways both the IRS and state tax agencies are working to combat these fraud schemes. To read the full article click here.

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information. If you are interested learning more, contact us today.

Scam Alert: QuickBooks & Intuit Phishing Emails

Recently there has been a rise in the number of phishing emails that appear to be sent by QuickBooks and Intuit. These messages state that the customer has a payment due on an open invoice. The balance due on the fake email is a higher amount than the typical cost of the software and any subscriptions offered by Intuit.

3 Common Methods for Phishing:

  • Spoofed Email Address – We have seen fake email addresses such as intuit@hmrsss.com and quickbooks@bostonsat.com.
  • Fake Link – Never click on a link in a suspicious email. These links may take you to a site that asks you to log in, providing hackers with your account information. Use your mouse and hover over the link to see if you can spot a hidden web address that is different than the one on the surface. An example of a message that would be included with a fake link:

       “This invoice notification is being delivered to you by Intuit Invoice Services on behalf of Veri Facts Inc. Click the link above to find an invoice.”

  • Forged Website – Fake websites may appear like real sites by using company logos and images. When visiting financial sites, enter the known address into the browser field manually.

Phishing was listed as one of the top tax scams of 2017 and continues to be an issue.

If you receive these emails – do not click any links! Forward the email to spoof@intuit.com immediately. For more information and to learn steps to protect yourself from a phishing attack, see the Intuit forum article here.

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information.  If you are interested in automatically receiving updates such as this, please subscribe to our blog.

Protect Yourself Against The New Tax Refund Scam

The IRS has reported that the number of potential victims impacted by a tax scam has increased from a few hundred to several thousand in just a few days. Putting a new twist on an old scam, criminals are taking taxpayer information, filing fraudulent returns, and depositing erroneous refunds into real taxpayers’ bank accounts. The criminals then contact the victim and use a variety of tactics to attempt to claim the refund.

The scam appears to have originated from tax preparers’ offices, where computers that have been infected with malware provided criminals with access to thousands of consumers’ return data.

“Speed is critical,” the agency said in its advisory. “If reported quickly, the IRS can take steps to block fraudulent returns in a preparer’s clients’ names.”

As tax preparers increase their security settings to protect client tax and financial files, it is important that consumers also protect themselves by knowing identity theft warning signs.

Top Indicators of Tax-Related Identity Theft
  • More than one tax return was filed using your Social Security Number 
  • IRS records indicate you received wages from an establishment at which you never worked
  • You owe additional tax, receive a refund offset notice, or have had collection actions taken against you for a year you did not file a tax return
If you become a victim and notice an erroneous deposit in your account, take the following steps:
  • Contact your tax preparer immediately.
  • Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  • Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
  • Be aware that interest may accrue on the erroneous refund.
  • Communicate with your financial institution and be prepared to close your account, since the information has been accessed by criminals.

You can also access the steps for returning your erroneous refund directly on the IRS website.

Remember: The IRS does not initiate contact with taxpayers by email, text, or social media, or phone calls to discuss your account. If you receive a message, be suspicious!

LBA Haynes Strand is dedicated to alerting the public on any scam or fraudulous attempt to steal identities or gain access to important financial information. If you are interested in automatically receiving updates such as this, please subscribe to our blog.

Property Management Companies Are Growing Through M&A

Mergers and Acquisitions have become an increasingly popular growth strategy among property management companies. In an earlier blog titled, “What Industries Are Growing Through M&A,” we mentioned property management companies as a top industry for mergers and acquisitions. So let’s dig a little deeper and learn what is being gained by M&A and what trends are driving M&A in the property management marketplace.

What Property Management Companies Are Trying To Gain Through M&A:
  • Size/Proximity to New Locations: In some cases, especially in the Charlotte area, management companies are looking to grow across State lines.  Rather than a Charlotte based management company opening a new location in South Carolina, they will often acquire other established management companies already based in South Carolina.  This is also true within the State as well (Charlotte -> Greensboro, Wilmington, Raleigh, etc.)
  • Economies of Scale: Management companies deal with many different service providers from landscapers and painters, to accountants and attorneys.  As management companies grow and manage additional communities through M&A, they are better able to pass cost savings (via economies of scale) onto their clients.  Doing so, theoretically, makes the management company more attractive in the market place as they are better able to offer attractive rates.
  • Additional Management Offerings: There are many local management companies who specialize in residential communities while others mainly do commercial associations.  Through M&A, management companies may be able to acquire residential work if they didn;t already have it, or vice versa.
What Trends Are Driving M&A In The Industry:
  • Real Estate Brokers Wanting Out: Community management is NOT a glamorous field. In lean times (2008 – 2012) many small/local real estate sales offices turned to property management when they were struggling to sell homes. With real estate “Hot” again, some real estate agents are looking to shed their portfolio of community associations to better focus their efforts on more lucrative selling activities.
  • Lack of Succession Planning: Similar to the CPA industry, some “mom and pop” community management companies simply have no succession plan, while other “younger” management companies are seeing this as a great opportunity for M&A.
  • National Players Coming To Charlotte: Up until 2008, community management in Charlotte was pretty much locally run (i.e. 20 or so management companies throughout the State and SC, perhaps). However, in the past 5 to 7 years, Charlotte has experienced an increase in nationally known management companies who often launch their local office by purchasing a locally-owned community management company.

This may be un-chartered territory for some management companies, and LBA Haynes Strand is here to help. We have a team that understands the needs and the financial issues associated with HOAs and property management companies. If your property management company is looking to grow through M&A, schedule a no-cost consultation with us and we will walk you through the steps for a successful merger or acquisition.

Preparation: The Key to March Madness and Tax Season Success

The NCAA college basketball tournament is always an exciting and often maddening time for all of us.  While these teams are looking to play the part of bracket buster, your accountants are working hard to see to it that tax season is not a maddening time of year for you.  CPAs thrive on this time of year, and leave it all on the court..I mean…office, to make sure that their clients receive the best possible results.

Last second shots and unexpected upsets may be common in the NCAA tournament but are not common in our world.  Tax planning is the reason for this.  Tax season isn’t something that is done over the period of a couple months time, this is something that is worked on continuously throughout the year.  Accountants and clients alike must be equally prepared come tax season.  The quote of basketball coaching legend John Wooden sums it up best, “Failing to prepare is preparing to fail.” So let’s take a look at some steps that you can take to prepare yourself against the stressful affects of the April tax deadline:

Don’t Procrastinate … Be Proactive

Tax planning is not one single task, designated to one single month. Usually, when people finish their taxes, they breathe a big sigh of relief. Whew, glad that’s over. But it’s not over, in fact, tax planning for the next year should begin shortly after your taxes are filed for this year.

See what do we mean by adopting a proactive mindset? If you’re thinking ahead, and keeping your finances in order through the entire year (and not waiting for March to prepare them all) you’re avoiding unnecessary stress during tax season.

Collaborate With Your CPA

Most people attempt to prepare their taxes on their own. And most people miss out on golden financial gains. The average taxpayer does not have the expansive financial knowledge and insight of a professional accountant, nor should they, but that’s what makes do-it-yourself tax planning such a risky idea – you’re gambling with possible financial gains.

When you contact a CPA firm, not only do you receive the professional guidance needed to navigate complicated tax territory, you receive financial consultation catered specifically towards your company’s future.

Consider Wealth Management

Part of tax planning is considering your investment options. Most people shy away from investments because they strongly dislike the idea of possibly losing money. Investing is not a gamble, it is a calculated risk when consulting with a wealth management advisor.  The advisor takes in to account whether you are risk adverse and builds a plan that fits your needs and your desires. A wealth management service, along with your CPA and financial advisor, guide you in making the right decisions for building a sustainable financial future.

Discussion Before Decision

Even after you’ve learned a thing or two from your CPA firm, it’s still always a good idea to consult with them on significant financial circumstances. For example, if you’re thinking about selling your business, a CPA firm can give you the tax logistics, implications, and benefits behind all your possible options.

There are a number of financial factors that go into tax planning, and cramming them all into a one-month timeframe creates a chaotic mess of last-minute desperation. Being pro-active in your tax planning and consulting with professionals will help you avoid the stress and headache that are often associated with the April tax filing deadline.

Click the button below to begin your conversation with a coach..err…certified public accountant with LBA Haynes Strand and begin seeing the results of being prepared.

Practice Health Insurance Options: Traditional Group

The traditional choice for most businesses is a group health insurance policy. This business chosen plan provides coverage to employees, and potentially, employees’ dependents. Depending on your Practice size, this traditional option may still be a good fit for you. However, for the majority of single doctor locations, this proves to be prohibitively expensive and is not the right solution. Practices that offer group health insurance pay a fixed premium for the policy, and then, pass on a portion of the premium cost to employees. For example, the employer may pay 50% of the premium and the employee is then responsible for paying 50%.

Where should you look for and acquire this type of insurance? There are 3 basic options:

Many Practices find that their staff likes the traditional option because it’s familiar to them. It is how many of us have had insurance for the majority of our lives. However, Practices also find the cost to be higher than one can afford. Your employee census and the benefits chosen will drive the cost. We suggest Practices at least consider this option and shop the pricing as a baseline to compare to other options discussed later.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: Professional Employer Organizations

Your first question is likely, what is a PEO? Simply, it’s a Professional Employer Organization. That probably doesn’t help your understanding, does it? To define PEOs, we’ve brought in an expert in the industry, Jeff Wanner, to describe the components and advantages further.

What is a PEO?

PEOs (Professional Employer Organizations) have become a widely popular strategy for small and medium sized businesses across the country. PEO partnerships provide a great deal of value across an organization to greatly simplify administrative functions, contain employee benefit costs, and a streamlined strategy for compliance.

How does it work?

The role of the PEO is to co-employ their client’s employees, which is the primary mechanism for delivering everything previously mentioned. The responsibility to follow state to state employment regulations, payroll tax filings, worker’s compensation claims, and employee benefits administration falls squarely on the shoulders of the PEO.

These organizations work with clients across the country and accumulate massive buying power for things like medical benefits. Being a part of these groups allows for a much more consistent and predictable medical increase structure as years progress. Many PEOs have averaged less than 3% annual increases over the past 10 years, whereas the national average is well above 10%. With medical benefits being the largest employee-related expense (outside of salaries), it’s not difficult to see why this strategy is very appealing economically as the years go on.

I can use this for my Dental Practice?

Dental practices have found this strategy to be very appealing over the past 5+ years. As you know, dentists are extremely busy business owners that don’t benefit from adding complexity to their practices. Dentists aren’t students of state to state employee regulations and compliance. With one evaluation, they are able to turn the key on essentially every aspect on the employee side of their practice. The only challenge is picking the right partner for your practice!

Companies like PairPEO are great resources for these evaluations and will even help through the implementation process for your practice. This is a good resource to start with to ensure the correct partner is brought to your practice.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: QSEHRA

Historically, small businesses, including dental Practices, have met the need for employee insurance with a traditional group plan or providing an increase in salary to allow employees to purchase their own insurance. With the work of Congress, there is a new option in the marketplace. This option is the qualified small employer health reimbursement arrangement (QSEHRA).

Through QSEHRA, businesses with 50 employees or less are able to offer employees a monthly allowance of tax-free money. Sounds easy, right? Maybe. Employees then must choose and pay for their own health care, potentially including personal insurance policies, and the business reimburses them up to their allowance amount.

This allows businesses to keep control over their budget while offering a meaningful benefit to their employees. At first glance, Practice owners always love this option but the devil is in the details so, let’s review those.

How it works:

Step 1: Practices set the allowance. Practices choose a monthly, per-employee allowance of tax-free money to make available. Currently, there are no minimum contribution requirements and Practices are able to offer different allowance amounts based on an employee’s family status. In 2018, QSEHRA contribution limits allowed businesses to offer up to $420.83 a month for single employees and $854.16 a month for employees with a family.

Step 2: Employees make purchases. Employees with a QSEHA are permitted to buy what fits their personal health needs. There are a variety of expenses eligible for reimbursement, including personal health insurance premiums, copays, deductibles, prescription drugs, and many more.

Step 3: Employees submit proof of expenses. After incurring an eligible expense, employees are required to submit proof to the Practice through documents that include: a description of the product or service, the cost of the expense, and the date the employee incurred the expense.

Step 4: Practices review and reimburse employees’ expenses. After an employee submits an expense, the Practice or an approved third party should review the documentation and reimburse the employee from their monthly allowance.

With the QSEHRA, reimbursements are free of payroll tax for both the Practice and its employee. Reimbursements can be free of income tax for employees if the employee is covered by a policy providing minimum essential coverage (MEC).

Often, the QSEHRA is a good option for Practices to consider since it allows for complete personalization. Understanding your staff, their incentives, and their needs will be a priority when exploring this option.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Practice Health Insurance Options

You don’t have to look far to know that health insurance costs are on the rise. It’s becoming a hot topic for Practice owners and their employees. If you haven’t already been asked by your staff to add health insurance, or why the cost keeps going up, you likely will soon! As a Practice owner, you are faced with trying to juggle employee satisfaction and retention in addition to managing profit margins and cash flow. If you are considering adding health insurance, changing plans, or looking for ways to manage the cost, you can count yourself in a growing group of concerned Practice owners. Health insurance is a valued benefit for your staff and you need to make sure you can offer it at a sustainable cost to your overall margins.

You may ask yourself… why even offer it? It’s a hassle. It’s costly. Does my staff even really appreciate it? These questions have caused many Practice owners to procrastinate on offering it and others to drop it altogether. In 2019 and into the future, your Practice will face an increasingly competitive marketplace for talented staff. Health benefits can be a vital part of attracting and maintaining high quality talent.

Don’t worry, it’s not all doom and gloom. There are more options today for your Practice than ever before. Below, we’ve listed and will subsequently review some of the most popular health insurance options for Practices in 2019.

  • Traditional Group Health Insurance
  • Association Health Plans
  • Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs)
  • The “Bonus” Plan
  • PEO’s
Honorable Mentions:
  • Group-integrated HRAs
  • Self-funded Health Insurance

In full disclosure, the above are options for health coverage, just not common for the dental industry. Know they exist, but these should be viewed as an outlier solution for your Practice.

As each of the options above are considered for your Practice, our dental team can help you find the right partners in your market to help determine the best option for you, analyze the cost to your bottom line and industry standards, and project the cash flow impact to you as the owner (considering tax implications, including review of potential tax credits). Analyzing each of these options is a lot to tackle on your own so bringing in a qualified professional will be key.

In our following posts, we’ll review the basics of how these options work, the corresponding pros and cons, roadblocks to certain options, and highlight the right Practice profiles.

If you have questions or would like to be connected with a health insurance partner in your area, contact us today!

Practice Health Insurance Options: Association Health Plans

A new rule issued by the Department of Labor in 2018 expanded the availability of association health plans (AHPs) for small businesses. AHPs allow small businesses to band together within industries, professions, or geographic regions to either purchase large-group coverage or self-insure.

In North Carolina, this is a popular option and it exists in many state for Dental Associations. The NC Dental Society offers an Association plan that allows a Practice owner to open up “group” insurance to his or her staff. More information about the plan specifics can be found here

Once the benefit is in place, it works much like a regular group policy or self-funded health insurance benefit would. However, AHPs aren’t subject to the ACA’s rating rule, which prevents insurers from varying costs in a specific region based on things like sex, age, or health status. They also don’t need to cover the essential health benefits that ACA-compliant policies do.

Administration is typically done by the association, rather than by the small business members.

AHPs can help cut costs, often by between $1,900 and $4,100 per employee per year. However, AHPs achieve these cost savings not only by widening the risk pool, but also by cutting out standard coverage items. The AHP may not cover essential health benefits, such as prescription drugs, maternity care, or mental health services.

The NC Dental Society plans are competitive to group policies and offer a valid option for Practice owners. If you make the decision to offer the plan, you still need to understand your option on how you pay for the plan for employees and yourself – both of which have tax implications.

If you have questions or would like to connect with a health insurance partner in your area, contact us today!

Non-Profit Tax Guide: Getting To Know The Form 990

The Form 990 is a tax document that tax-exempt nonprofit organizations are required to file each year with the IRS. The 990 discloses potential conflicts of interest, regulatory details, governance, compensation of board members and staff, and other details that relate to financial accountability. Filing the 990 correctly and in a timely matter, allows your nonprofit organization to maintain its tax exempt status. Once the 990 is filed, it is posted for the public to see. Websites such as Guidestar.com allow anyone to look at any organization’s Form 990, in order to get a better understanding of the structure and success of the nonprofit organization.

What’s the purpose of the Form 990?
  • Increased transparency and to provide a realistic view of the organization for the IRS and the public
  • Promote tax compliance by accurately reflecting the organization’s operations
  • Allow efficiency in the assessment of risk of noncompliance

The Form 990 has caused dramatic increases in the cost of compliance for nonprofits. At first, this only impacted the larger nonprofits. However, the smaller nonprofits are now feeling the increased cost of the 990.

Who is required to file a Form 990?

Tax-exempt organizations that have gross receipts totaling at least $200,000 or assets worth at least $500,000 must file the Form 990 on an annual basis.

When is the Form 990 Due?

You must file your organization’s 990 by the 15th day of the 5th month after your accounting period ends. For example, say your fiscal year ends on December 31st, then the 990 is due on May 15th the following year.

What are the penalties for not filing a Form 990?

There are many penalties for failing to file the Form 990 properly.  The list of penalties below can help you be prepared in order to avoid them.

  • The Penalty for not filing is: $20 per day, up to a maximum of $10,000 or 5% of revenue.
  • If revenue is greater than $1 million the penalty for not filing is: $100 per day with a maximum fine of $50,000
  • For failure to include information concerning liquidation, dissolution, termination, or substantial contraction: $10 per day, with maximum of $5,000.
  • Your “tax-exempt” status will be revoked if you don’t file for 3 years.
  • Once you receive an IRS notice and don’t respond: $10 per day on the responsible individual, up to a maximum of $5,000.
  • Failure to comply with public disclosure requirements: $20 per day in penalties, up to a maximum of $10,000.
  • There is no maximum penalty for failure to disclose the organization’s exemption application.
How to be prepared for the Form 990?

Being prepared is the best way to handle any tax situation.  Being proactive and having a tax plan minimizes the risk of any last minute tax surprises and allows you to be a little more stress-free when it comes time to file your Form 990 on an annual basis.  Below is a list of suggestions to help you be prepared when filing your Form 990.

  • Make sure you document as much as possible throughout the year for internal purposes.
  • Track as much information as possible from contributors, including amount, name, location, how they contributed, etc.
  • Track the revenue and expense by each event or by function.
  • Tip: Unrelated business tax income is a big issue!  If it’s not part of the core function, it is probably taxable.
  • Consult your CPA for specifics to your organization.  Every nonprofit organization is different and has different issues.

LBA Haynes Strand has handled the Form 990 for many North Carolina based nonprofit organizations, and our team is well versed in the nonprofit industry. Our nonprofit accounting team is ready to help your organization maintain its tax-exempt status and provide the accounting advice you need throughout the year to run a successful nonprofit. Contact us today!

IRS Business Owners

Interacting with the IRS: New Business Owners

Did you start or acquire a new business this year? If so, you may feel a little overwhelmed with the new responsibilities and you could be a little intimidated interacting with the IRS for the first time. The first thing you should do as a new business owner is get a tax ID number or Employer Identification Number (EIN). You can apply for this directly through the IRS online.

Your Tax Responsibilities:
  • File your business’s annual income tax return
  • Pay estimated taxes for you if you own a pass-through entity or for your C Corporation
  • Payroll Tax Activities: withholding, depositing payments, and filing employer tax returns
  • Submit information returns if you have independent contractors, maintain qualified retirement plans, or offer other benefit programs to your staff

You can and sometimes must handle certain tax responsibilities electronically. Many online activities can be facilitated utilizing government provided resources listed below. Not everything listed below may apply to you so remember to consult your accountant if you have any questions.

Depositing Taxes
  • If you have a payroll or make estimated tax payments, schedule your tax deposits in advance by using EFTPS.gov.
  • Transmit W-2s to the Social Security Administration
  • Submit copies of employees’ W-2s with an IRS transmittal form (Form W-3) to the Social Security Administration through the Business Services Online. This suite of services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet. You must register and create your own password to access Business Services Online.
  • Remit Information Returns to the IRS
  • You may have to file annual information returns to inform the IRS about your payments to independent contractors you utilize. Complete this task through the Filing Independent Returns Electronically (FIRE) System
Filing Annual Retirement Plan Returns

If you want or need to file a form in the 5500 series electronically, do this through the Department of Labor’s EFAST2. This is an all-electronic system designed by the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. The purpose is to simplify and expedite the submission, receipt, and processing of the Form 5500 and Form 5500-SF. These forms must be electronically filed each year by employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

If you need assistance with any of the required tasks above, our professionals can help. Click here to contact us today!