American healthcare is poised for some pretty radical changes over the next several years – changes that are relevant to everyone from the youngest child to the oldest retiree. If you’re a small business owner or an employee of a small business, you’re probably wondering whether the new laws and regulations will impact you. Read on to learn about potential changes to your insurance and healthcare premiums.

Changes Starting in 2010

The upcoming healthcare changes will be phased in over the next few years. Although the bulk of the new regulations are slated for 2011, 2013, and 2014, there are two significant changes taking place in 2010.

During the period of 2010-2013, as the new regulations are gradually introduced, qualified small business owners are eligible for a tax credit of 35% on their contributions to health insurance premiums for their employees. Known as the Small Business Health Care Tax Credit, this perk is available only to small business with fewer than 25 employees and average wages of less than $50,000 annually.

In addition, parents will now be permitted to include adult children (up to age 26) on the coverage offered by tax-qualified, employer-provided health plans.

Changes starting in 2011

From 2011-2015, small business employers will be eligible to receive federal funding if they provide their staff with wellness programs.

Small businesses will also be permitted to form collectives or alliances in order to purchase employee health insurance policies at better rates. The online programs that will make this possible, known as SHOP or Small Business Health Options Programs, will receive state-level funding from federal sources.

You can also expect to see some more specific changes to permissible medical expenses. The definition of qualified medical expenses will be altered to exclude over-the-counter medications. This affects all Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs), as well as reimbursements through Health Flexible Spending Arrangements (Health FSAs) and Health Reimbursement Arrangements (HRAs). The annual limit on allowable medical expenses from flexible spending accounts will be capped at $2,500.

Finally, a “cafeteria plan,” which allows employees to pick and choose benefits as needed, will be introduced for small business staff and the self-employed beginning in 2011.

We’ll explore some more details on the upcoming healthcare changes in our next post.

Earlier this year, the American Recovery and Reinvestment Act (ARRA) outlined some new and expanded tax benefits for individuals and business owners who invest in energy-saving appliances, improvements, or alternate energy sources that result in reduced usage and conserved resources.

Homeowners can earn a tax credit of up to 10% of the cost of solar energy systems, energy-efficient construction, or other alternate energy sources. This isn’t just a deduction of your income—it’s a full credit that is deducted directly from the amount of taxes you’re required to pay.

Each individual improvement is subject to its own set of criteria. Below are some specific green tax incentives available to business owners:

• Commercial buildings: If you build or renovate a commercial building that uses 50% or more less energy than the national average, you may be entitled to a tax credit of up to $1.80 per square foot.
• Combined heat and power systems (CHPs): If you institute a CHP that meets the minimum efficiency specifications, you could be eligible for an investment tax credit of up to 10%.
• Commercial vehicles: If your business uses fuel-efficient hybrid vehicles, you can earn tax credits based on the weight, fuel economy, and purchase price of the vehicle.
• Fuel cells and microturbines: If you invested in these eco-friendly technologies this year to generate electricity and power for your business, you could be eligible for tax credits of 30% of the cost of fuel cells or 10% of the cost of microturbines.
• Solar energy systems: Businesses that use solar energy for lighting, water heating, or electricity can receive up to 30% of the cost of the system in the form of a tax credit.

It’s great that the IRS is taking steps to recognize and reward energy-saving measures, but the specific clauses are complex. Eligibility is dependent on where you live, whether your investment meets specific criteria, and when the energy-saving tactic was put into place. There are extensive provisions, changes, and limitations that can be confusing for the average taxpayer to decipher. To make sure you’re reaping the maximum benefit of the new “green” tax laws, it’s best to consult with your CPA.

1. Medical expenses: If your annual medical bills add up to over 7.5% of your income, they can be written off as a tax deduction. While you can’t count portions that were paid by an insurance policy, any non-covered costs are eligible, including associated expenses like insurance premiums and mileage to and from a treatment facility.
2. Property taxes: As of 2008, married couples filing jointly can enter a standard deduction of up to $1,000 for real estate taxes, and single homeowners can deduct up to $500—even if they don’t have enough deductions to file an itemized return on a Schedule A.
3. Moving costs: It’s one of the most stressful ordeals a family can go through, but at least you can reap a tax benefit if the move was related to a job transfer. Your CPA can identify which moving costs are eligible to serve as deductions, such as mileage, truck rental, and storage fees.
4. Child care: You’ve already resigned yourself to this inevitable expense—but did you know that any child care, preschool, or even summer day camp fees qualify as tax credits if your children attend during your work hours?
5. Working from home: Even if you don’t feel comfortable writing off the corner of the bedroom as home office space, you can deduct any purchases you make that support the work you do at home, such as a laptop, planner, pens and notebooks, business cards, and possibly even Internet access.
6. Job hunting: With rampant layoffs and longer periods of unemployment, this oft-overlooked tax break can mean considerable savings for workers who are seeking a new position within the same field. Keep track of printing costs, travel expenses, recruiters’ agency fees, and any expenses related to your job hunt.

When you work with a CPA, you’ll enjoy the peace of mind that comes with having a fresh (and highly trained) pair of eyes to evaluate your financial situation. After all, wouldn’t you rather be focusing on your business or family than crunching numbers? Let a professional chase down hidden tax deductions, saving you valuable time and money.

Although there’s no surefire way to bullet-proof yourself against a tax audit, a good CPA can help make the process less painful by offering helpful tips like these:

1. Keep records for at least the past three years. The IRS typically initiates audits within 18 months of a filing, but by law they have up to three years before the statute of limitations ends. By having all of your forms and receipts organized and easily accessible, you’ll greatly reduce stress in the event of an audit. When you work with a CPA, you’ll receive all of the year’s tax documents neatly packaged for your files.
2. Avoid math mistakes. Although a numbers blunder doesn’t necessarily mean you’ll be audited, honest mistakes can result in increased attention from the IRS, which is rarely a good thing. A CPA will check all calculations meticulously before submitting your return.
3. Acknowledge red flags before the IRS does. If you have an unusually large deduction or another anomaly, include copies of all related documentation to head off any confusion or suspicion. The IRS agent examining your return will recognize your efforts to remain compliant.
4. Be cooperative. Remember, an auditor is just doing his or her job. If you react belligerently, you could be opening yourself up to closer scrutiny. Clearly and politely answer the questions that are asked of you, but don’t volunteer additional information. When you treat the auditor with respect, you’ll most likely find the experience to be less unpleasant than you anticipated. One of the bonuses of working with a CPA is that he or she will negotiate directly with the IRS on your behalf.

Facing a tax audit can be scary, but you don’t have to do it alone. Above all, the most effective tool you can have is a qualified CPA. A certified tax professional can guide you through the process, address your questions and concerns, and prevent common pitfalls, all of which will help you get through the ordeal with the least possible amount of pain and hassle.

If you think an accountant’s role is limited to preparing and filing annual tax returns, it’s time to adjust your expectations. Many of our new clients are pleasantly surprised to find out how much work we’re prepared to take off their plate.

One of the biggest mistakes business owners can make is withholding information from their CPAs. While basic financial data— W2 and 1099 forms, real estate interest statements, receipts for business expenses—is important, we dig deeper to ensure a clear understanding of our clients’ businesses and long-term goals. Below are some of the most important things to convey to your tax professional before tax season:

• Major life changes. These can apply to your personal or professional life. Examples of events to share with your accountant include the merger or sale of a business, the purchase of a new property, or an impending divorce or marriage. Any of these things can impact the distribution of your business profits.
• Projected income changes. Whether you anticipate fiscal challenges or you’re about to launch a revolutionary new product that promises to boost your revenue, it’s wise to let your accountant know what you’re expecting. Your CPA can help with any cash flow or re-investment concerns.
• Retirement goals. Do you have a timetable for when you’d like to retire? As a self-employed entrepreneur, are you unclear on the differences between a traditional IRA and a Roth IRA? Regardless of your age, it’s never too early—or too late—to discuss retirement options with your CPA.
• New projects or investments. If your business is venturing into new markets or about to start offering a new product or service, this change in direction could have an impact on your tax strategies.

As you approach tax season, a well-informed CPA is one of the most important business tools in your repertoire. The more your tax advisor knows about your current situation and long-term plans, the better he or she can help you achieve your personal and professional goals.

You wouldn’t set off on a cross-country journey without your GPS system—so why risk navigating the sometimes turbulent waters of business ownership without a qualified tax professional to guide you?

Considering the proven benefits of hiring a Certified Public Accountant, it’s surprising that a significant number of business owners don’t use one. What’s stopping them? Below are a few of the most common reasons we’ve heard, along with some facts to set the record straight.

Excuse #1: “I built my business from the ground up. Surely I can handle filing a tax return.”

While it’s true that the most basic tax returns can be completed with relative ease, a CPA’s services go well beyond filling out a few forms and sending them to the IRS. A good accountant will provide financial guidance throughout the entire year, not just during busy tax season. He or she will help you create a long-term strategy for growth and success, looking beyond the numbers to identify the unique challenges and goals of your business.

Some entrepreneurs and start-up business owners are used to doing everything themselves, and that “DIY” mentality can extend to their taxes. While it can be tempting to try and save some money by taking care of your own accounting needs, it’s important to understand that enlisting the services of a CPA doesn’t mean you’re incapable—to the contrary, it signifies that you care enough about your business to invest in its growth and dedicate more resources to essential areas.

Excuse #2: “I’ll just go online or buy a book to find all the tax information I need.”

Although there is extensive information available on the Internet and in tax books, no amount of singlehanded research can replace the benefits of a personal relationship with a CPA. When you meet with a tax professional, he or she will be able to get a clear picture of your goals and challenges, analyze the nuances of your situation, and make a customized recommendation. While knowledge and education are essential, they’re most effective when combined with a face-to-face consultation that’s driven by YOUR individual needs.

Excuse #3: “My business isn’t big enough to warrant a CPA.”

It’s a common misconception that only very large, lucrative businesses need a CPA. The truth is, companies of all sizes and profit margins can benefit from the services of a tax professional. An experienced CPA can help with all aspects of your business financials—tax returns, bookkeeping, payroll, financial analysis, in-depth reporting, and more. This will allow you to dedicate more resources to revenue-boosting activities, such as marketing strategies, product development, and client satisfaction.

Excuse #4: “I can’t afford to hire a CPA.”

Considering the significant tax and efficiency savings provided by a good CPA, a more accurate statement would be “I can’t afford NOT to hire a CPA.” With our reasonable rates and value-adding services, our professional tax services are a no-brainer investment in the success of your business.