Affordable Care Act Compliance Forms Part I: The Individual
Jan 19, 2016
The Affordable Care Act (ACA) continues to raise compliance concerns for many businesses and individuals alike. The IRS recently introduced new tax forms for individuals, employers and health insurance providers to determine if shared responsibility payments are necessary. Such payments are penalty fee for those who failed to obtained health insurance as instructed by ACA legislation. If you do not have health insurance, or were subject to a cap in your coverage, you may have to individual responsibility payments.
Form 1095-A This form should be provided to the individual who is participating in the health care marketplace (often called Exchanges). They will from from the insurance company providing coverage. The 1095-A form is a health insurance marketplace statement and should be used to complete your income tax filing. It may also be used to claim premium tax credits or adjust any payments which may be due.
Form 1095-B This form will be sent to covered individuals and dependents by the insurance company providing coverage through an employer-sponsored plan. In the case of an employer partially or self-funded plan, this form must also be sent to the employees of the employer. Form 1095-B is used to verify your compliance with minimum essential coverage (MEC).
Form 1095-C This form is used by employers with more than 50 full-time employees or full-time equivalent to prove coverage was offer to you by your employer in 2015. The form will outline the coverage offered by your employer and whether or not you chose to participate. This form can also be used to complete your tax return. If you receive any of the above forms and have questions or concerns about the content or methods for filing your tax return, please call your William Vaughan Company representative.
Categories: Healthcare & Dentistry
Cost System Updates: Avoid Letting The Tail Wag The Dog
Jan 18, 2016
I recently met with a client who is interested in updating their costing model. The organization currently has an excellent model which we helped create several years ago. However, some of the company’s processes and procedures are being modified and management recognizes the need for a cost system update.
Reviewing your costs system is essential, but it is even more important when changes to your operations occur. For instance, if you begin manufacturing a new product, or if you change the method in which a product has traditionally been made. Chances are your drivers and your allocation bases will not be as accurate.
In this particular example, the client recognized the need for system revisions given the changes in processing. They were considering producing certain products in a different manner than previously executed. The company’s current costing model displayed data stating it would be too expensive. The company questioned the data’s accuracy and wondered what it would actually cost?
An inaccurate costing system may oppose the production of an item in a particular method, but the information may be incorrect. The tail may be wagging the dog in this instance. These critical decisions cannot be made until the system is updated and accurately costing processes.
It is important to continuously review and improve your cost system. If report data does not seem realistic or accurate, take the time to review your system and make necessary adjustments. After all, an inaccurate cost system is not very useful! In addition, it is essential to evaluate the driver and allocation bases on an annual basis.
In the end, make sure you have established a reactive cost system, one which involves critical thinking about the outcomes you desire. Don’t let the tail wag the dog. Be mindful of drastic developments or fluctuations which require system updates. Having an accurate costs system can help you make effective business decisions about the future of your organization.
Categories: Cost Accounting
There Is An App For That …..
Jan 14, 2016
By now, you are probably tired of hearing about New Year’s resolutions. However, with tax season just around the corner, have you given any thought to how you might organize your tax records? This topic may be a specific interest to those with business related expenses. You may already have the typical shoe box storage which eventually becomes so full it is difficult to contain your files. With advanced technology and the growing capabilities of smartphones, here are some helpful apps which may ease the collection process.
Expensify – Acknowledged by the tech community as the best app for expense reporting, Expensify takes the time, paper, and headaches out of your expense reports! The app allows you to scan receipts, create reports, and sync with your band and credit cards. Plus, it is easily integrated with QuickBooks, SalesForce, Excel, etc.
Shoeboxed.com – Shoeboxed is an award winning app which has been featured in Forbes, The New York Times, The Wall Street Journal, The Today Show, and hundreds of other publications. This amazing app serves as smeans to track receipts, mileage and even business cards. Simply snap a picture and the app will extract the vendor, total amount, payment method, date etc. You can also instantly create expense reports and file by the most common tax categories.
Doxo.com – Doxo is a virtual filing cabinet, excellent for anyone trying to go paperless with household documents. The app syncs with your personal accounts including banking, mortgage lenders, insurance providers, etc so you can manage your bill payments for a wide variety of services. If the account is not electronic to start, you can scan the information and make it digital. In addition, you are able to scan items like warranty information, your passport and medical records so you are able to access all your information in one location.
Mileage Log+ – Hands down, this app is one of the most feature packed and easy to use mileage trackers available. Not only will it track mileage for medical, charitable and business purposes, but it automatically logs your miles with the current IRS standard mileage rates.
IDonatedIt – The first ever app available to tack and value all of your non-cash charitable donations.
Before you commit to using one of the many apps available, make sure to spend some time researching reviews to ensure you get the features most important to you as the consumer. Some apps may require a one-time or monthly fee. Putting your smartphone to work may be the best decision for your business needs. If you are using your personal phone for business purposes, you may be able to receive a business deduction for the dollar amount utilized for business purposes!
By: Tara West, CPA, CMA, CGMA, Manager
Categories: Other Resources
Tax Implications of Being A Rideshare Driver
Jan 12, 2016
You may have booked a ride on your smartphone using Uber, Lyft or another rideshare or private driver service. These services allow passengers to experience something more than what a traditional taxi cab may offer. For many, the attraction of such employment is the flexibility and ability to be your own boss. As a result, many of these drivers are supplementing their income to cover housing, education, etc. What are the tax effects for these self-employed drivers? Here are some important points to consider:
You are now the proud owner of your own business. You can make your own hours and work for yourself. However, you will need to remember the income you earn is subject to self-employment and may be taxed at a 15.3% self-employment rate.
In addition, you will receive a Form 1099 in January. This form will depict the income earned while driving. This income will be reported on your Schedule C of your federal income tax return. Please note, it does not have any federal, state, or local taxes withheld. You may lessen the amount of taxes owed on April 15th by paying quarterly estimated tax payments. Or, if you have another job where you receive a W-2, you can have that employer increase your withholdings to help cover the taxes to be owed related to your Form 1099.
In addition, remember to keep good records related to your business expenses. When you make purchases for gas, car washes, etc. you should keep your receipts to document these business deductions. In addition, it is important to keep a record of the miles driven while conducting your business.
When taking on any business venture which allows you to be your own boss, it makes way for additional complexities on your tax return. It is important to anticipate your tax liability and keep good documentation to allow for smooth accounting of these business ventures.
Kristin Metzger, CPA
Categories: Other Resources
Making Key Performance Indicators Useful To The End User
Jan 12, 2016
A few days ago, I spoke with a business manager about a Company’s new accounting system and the information which could be derived from the system. In this specific case, the organization had spent quite a bit of time and money implementing a new system in hopes of providing management information that would significantly improve efficiencies and overall profitability. As a byproduct, the new system can now produce key performance indicators (KPIs) far more quickly and accurately than had been available in the past.
The purpose of our conversation was to determine what data users may want to measure. We talked about a variety of options, as well as report formats and frequency. We concluded the end user should ultimately decide what data should be presented, how frequently, and the format. Even though both the manager and myself may have been able to anticipate the needs, the most useful key performance indicators are those most recognizable by the end user.
I am currently working with another startup company on the same basic project. In this case, the owner of the business started without an accounting system or support, but has built a very successful business in a very short period of time based solely on client service and technical knowledge. The owner had little knowledge of the capabilities of his accounting system and therefore, had little input as to how it could be modified to better suit the needs of the company.
It was my job to suggest KPIs the business owner would find useful in this rapidly growing, highly profitable company. What I quickly realized was this owner had no fundamental insight into the meaning of balance sheet numbers and trends or income statement numbers and trends. Therefore, he had far greater difficulty understanding how KPIs could be managed to improve the overall operation of the company. In this instance, I believe sophisticated KPIs would be too much for the owner. Instead, we are going to begin with very simple KPIs with a plan to upgrade and modify the complexity as time goes on.
I am cautious of presenting this owner with a sophisticated array of data which is of little use in their day-to-day management and therefore might be quickly ignored or completely shut down. This is not to say the information is not useful or relevant, but since the owner is not up to speed with how such information could and should be used, it is better to be mindful of the data presented. My goal is to demonstrate useful information and how it can be manipulated or interpreted to improve operations and profitability. As I consistently present new and improved KPIs over time, I believe the owner will begin to realize the value.
I have concluded that KPIs have to be relevant, timely and understood by the end users to achieve improvements in operations and profitability. Providing managers with the information required to complete their job in an efficient manner will prove to strengthen the value of gathering and using KPI data.
Categories: Cost Accounting