What To Consider When Merging With Another Firm
Oct 22, 2013
Acquiring another company and merging it with your business can be the most efficient way to grow. But many acquisitions don’t pay off and it’s often management issues – not market conditions – that get in the way.
Here are eight basic strategies that spell the difference between success and failure in mergers and acquisitions, no matter what the size of the companies involved:
Pre-Merger Strategies
Consider the fit. If two businesses don’t have compatible goals and ethics, merging them can be counter-productive. This includes financial structures that can be merged; compatible customer bases, and corporate cultures that aren’t radically different.
Listen to the seller. Money often isn’t the deal-breaker. In some cases, if you can satisfy the seller’s non-financial concerns, you’ll have more negotiating power and the deal will go more smoothly.
Hit the books. Thorough due diligence is essential and requires a knowledgeable and relentless approach. Besides careful accounting, spot check with customers, chat with vendors and employees and talk to the neighbors. The more you know, the fewer surprises you’ll encounter.
Develop a game plan. Long before the purchase agreement is signed, there should be a detailed road map in place for joining the two operations.
Trust your gut. Even when an investigation makes the details look good, if the deal doesn’t smell right, don’t be reluctant to back out. Like gambling, you have to know when to walk away.
Post-Merger Strategies
Pick a team. Before you announce the merger, know who’s going to be in charge at the new company. That person will need plenty of time to focus on an arduous task and won’t be able to just add these duties to current assignments. Make sure that person has plenty of time to devote to what can be an arduous task. Don’t automatically get rid of the acquired company’s old guard. Evidence shows that their experience provides stability and helps navigate the shoals.
Consider the culture. Little things like who gets invited to a company party can throw a merged operation into a tizzy. The more you know about the acquired company’s culture, the more likely you can head off potential explosions.
Talk and talk some more. Controlling rumors among employees, shareholders and vendors is very important. Be open and honest in telling them what they need to know in order to feel secure enough to go about their business
Categories: Uncategorized
Are You Properly Recording Your Unclaimed Funds
Oct 17, 2013
All businesses that are located in and/or operate in the State of Ohio, or hold funds due to Ohio residents, are required to file an Annual Report of Unclaimed Funds. The only entities exempt from reporting are political subdivisions of the State, and Internal Revenue Code 501(c)(3) tax exempt hospitals.
Unclaimed funds are all intangible property, which is unclaimed by its owner(s) for a specific period of time, such as savings accounts, checking accounts, unclaimed wages, dividends, credit balances and many other types of outstanding checks and balances payable.
Some other types of accounts that are exempt from the unclaimed funds reporting in Ohio are: payroll checks less than $50.00, gift certificates, funds paid to or overpayments received from a company as the result of the receipt or issuance of an invoice. (business to business exemption applies here.) See the Annual Report of Unclaimed Funds Forms, Instructions and Information booklet for more information about accounts that are exempt from Ohio’s unclaimed funds reporting requirements. There is no minimum reportable dollar amount for unclaimed accounts, except for payroll checks less than $50.00.
Payments made as the result of a policy of insurance are not business to business exempt unless there is a contract between the insurance company & the service provider which makes them an in-network Provider. The contract creates a business relationship and therefore any credits due to and checks payable to the insurance company from the contract service provider are business to business exempt.
Failure to report unclaimed funds or for underreporting unclaimed funds, the company may incur civil penalties of $200.00 per day and/or a criminal penalty of up to $500.00 a day. The company may also have to pay interest at a rate up to 2% per month on the balance of unclaimed funds due.
We are seeing more and more unclaimed funds audits ~ are you in compliance?
By: Jenny Furey, CPA
Categories: Uncategorized
And the Winner Is… The IRS?
Oct 17, 2013
Winning anything, especially a prize, is always fun and makes us feel like we’re on top of the world. But something that can quickly bring a winner down to earth is the realization that they’ve just increased their tax liability with the win. Winnings are considered income by the IRS. Most of the time this just reduces the amount of a cash prize, but with non-cash prizes this can mean money out of the winner’s pocket.
For sweepstakes and raffles, a winning payout that is both over $600 and at least 300 times the wager must be reported to the IRS by the paying organization. This includes church raffles, charities, and other tax-exempt organizations. In addition, the organization must withhold the tax if the win is over $5,000.
Tickets to the Super Bowl are one of the most popular sweepstakes prizes. But if the tickets themselves (or tickets and travel) are the only prize, it might end up costing the winner more than they think. One of the indirect costs of winning includes creation of a tax liability. Non-cash prizes are subject to ordinary income tax rates and require an up-front withholding of 25% of their fair market value. This means that if a prize includes tickets, airfare, and accommodations valued at a total of $2,000; the winner will have to pay $500 in taxes up-front, out of their own pocket. And this is just the federal tax. Many states (including Ohio) and local governments will also collect tax on winnings.
Now lets not forget that winning is inherently a good thing, it just might not be as good as we originally think. If you’ve got a friend that wins a raffle or sweepstakes, there’s nothing wrong with letting them feel like a the million bucks for awhile before pulling them a little back down to earth by reminding them they now owe tax on the prize.
By: Anthony Mifsud, Staff Accountant
Categories: Uncategorized
Knowing A Good Attorney and CPA
Oct 15, 2013
I was watching Duck Dynasty this past week (I am a huge fan) and the episode reminded me somewhat of an article I recently read in CPA Voice from The Ohio Society of Certified Public Accountants. In this particular episode of Duck Dynasty, the patriach of the Robertson family, Phil,was driving his son, Willie, around on an ATV showing him the property that will eventually be passed down to him and his brothers. Phil had already decided to have the property divided among the four brothers, and of course Willie thought he was getting “jipped” with his portion compared to his brothers.
The article in CPA Voice related to Soprano’s star, James Gandolfini, whom passed away in June. The article explains that Gandolfini “missed several opportunities to maximize how much of his estate ends up with his family. Instead, he maximized the amount going to the IRS – possibly $30 million of an estimated $70 million estate”. Gandolfini could have left more to his wife and son, which would have been safe from taxation. “Close to 80% of the assets covered by the will could now be subject to a combined state and federal tax rate of 55%,” according to the article, due to him leaving less than 20% of his assets to his wife.
These two instances highlight the importance of having a succession plan and a plan for your estate. Planning ahead can not only save your heirs tax money, but can also relieve them a lot of future headaches. To have a good plan in place, one needs to know a good attorney and a good CPA – and they both need to work together.
Ultimately, what you want is to do what Uncle Si would do: sit back, relax, grab a cup of iced tea, and eventually take a nap. Knowing a good CPA and attorney will help you do just that.
By: Ryan Leininger, CPA
Categories: Uncategorized
IMPORTANT TAX INFORMATION: Government Shutdown = No Taxes, Right?
Oct 10, 2013
The dreaded October 15th deadline is rapidly approaching. This is the last day an individual can file their 2012 tax return without penalty, if they sought an extension back in April. However, with the government shutdown you may be wondering if you will have additional time to file. That answer, unfortunately, is NO.
According to the IRS’s website, “All tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines will remain in effect as well. Penalties and interest still apply for all late filings not received by the regular deadlines.” This means that you must file and pay all remaining tax liability by the 15th of October.
So the question arises, if you still have to file and pay on time, then anyone who is due a refund should be receiving it shortly, right? Nope! Many of the IRS employees have been furloughed, as they are considered nonessential personal. Therefore, no one is actually processing your return until the shutdown is over. Meaning that you won’t be receiving a refund for quite a while.
To add another wrench in the process, if you have a question regarding your 2012 taxes and want to contact the IRS for guidance, you will be unable to reach them. The live customer service agents who you normally call have been furloughed. Some good news is that many of the automated assistance lines are still up and running. But if you seek to discuss complex issues live with a specialist, you will have to wait until the government has resumed normal operations.
What happens if you are under current examination? This too will not continue until the shutdown is over. This could be good news, if you need more time to gather information or bad if you are due a refund and hoping to receive it soon.
Basically, what all this means for the average taxpayer is: proceed with your normal day-to-day operations and get your taxes filed. Unless you are due a refund, then you are on hold until the Government is back up and running!
By: Robert Bradshaw, CPA
Categories: Uncategorized