Accounting & Finance

Business Owner's Guide to Profit Planning

Owner's Guide to Profit Planning

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Whether your business serves 50 customers or 100,000 fans, International Bancard can help you grow by providing payment acceptance solutions, including credit and debit card processing, ACH, check, and gift cards. As a nationally recognized industry leader, businesses rely on International Bancard’s market insight, data security knowledge and client care to deliver exceptional service to more customers in more locations.

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Is Your Ex Going to Inherit Your 401(k) Plan Account? Are You Sure?

Article courtesy of SBAM Approved Partner AdvanceHR

There have been tragic stories about people forgetting to update their retirement plan or life insurance beneficiaries after a life-changing event. It is not uncommon for retirement plan assets to go to the ex-spouse instead of the current spouse, noted Kim Saunders, a tax analyst for Thomson Reuters. There are a few simple steps that retirement plan participants can take to make sure they aren't part of this story.

"Most of us in the U.S. are on the go from early in the morning until well into the evening-six or seven days a week," said Saunders. "It's no surprise that we may let some important things slide. We know we need to get to them, but it seems like they can just as easily wait until tomorrow or the next day or whenever."

A recent U.S. Supreme Court decision reminds us that "whenever" might never arrive and the results can sometimes be tragic, noted Saunders. The case involved a $400,000 employer-sponsored retirement account, owned by William, who had named Liv as his beneficiary back in 1974, shortly after they married. The couple divorced 20 years later in 1994. As part of the divorce decree, Liv waived her rights to benefits under William's employer-sponsored retirement plans. However, William never got around to changing his beneficiary designation form with his employer.

When William died in 2001, Liv was still listed as his beneficiary; therefore the plan paid the $400,000 to Liv. William's estate sued the plan, saying that because of Liv's waiver in the divorce decree, the funds should have been paid to the estate. The Court disagreed, ruling that the plan documents (which called for the beneficiary to be designated and changed in a specific way) trumped the divorce decree. William's designation of Liv as his beneficiary was handled in the way the plan required, Liv's waiver was not. Therefore, the plan rightfully paid the $400,000 to Liv.

The tragic outcome of this case was largely controlled by its unique facts. If the facts had been slightly different (such as the plan allowing a beneficiary to be designated on a document other than the plan's beneficiary form), the outcome could have been quite different. However, it still would have taken a lot of effort and expense to get there.

This leads to a couple of important take away points. "The first is that if a plan participant wants to change the beneficiary for a life insurance policy, retirement plan, IRA, or other benefit, he or she needs to use the plan's official beneficiary form rather than depending on an indirect method such as a will or divorce decree," said Saunders. "The second point is that it is important to keep beneficiary designations up-to-date. Whether it is because of divorce or another life-changing event, beneficiary designations made years ago can easily become outdated."

Taxpayers should consult with a personal tax adviser before applying these or other tax strategies.

Tax Records: What Can You Throw Away?

Article courtesy of SBAM Approved Partner AdvanceHR

Maybe it's a good thing that the April 17th federal tax deadline coincides with the urge to spring clean. It feels good to throw out some of the financial records stuffing your filing cabinets. But before you head for the dumpster, make sure you're not disposing of records you may need. You don't want to be caught empty-handed if an IRS auditor contacts you.

Important:  Before tossing out financial documents, shred them thoroughly. Identity thieves can obtain account numbers and other data by rummaging through trash.

In general, you must keep records that support items shown on your individual tax return until the statute of limitations runs out -- generally, three years from the due date of the return or the date you filed, whichever is later. That means that now you can generally throw out records for the 2008 tax year, for which you filed a return in 2009.

In most cases, the IRS can audit your return for three years. You can also file an amended return on Form 1040X during this time period if you missed a deduction, overlooked a credit or misreported income.

So, does that mean you're safe from an audit after three years? Not necessarily. There are exceptions. For example:
  • If the IRS has reason to believe your income was understated by 25 percent or more, the statute of limitations for an audit increases to six years.
  • If there is suspicion of fraud or you don't file a tax return at all, there is no time limit for the IRS.
How Long to Keep Documents

Like most issues involving the IRS or other government agencies, there's no easy answer to that question. The IRS does not require you to keep records in any particular way. But here are some basic guidelines to follow for individuals (Guidelines for businesses are in the right-hand chart):

Completed tax returns. Many tax advisers recommend that you hold onto copies of your finished tax returns forever. Why? So you can prove to the IRS that you actually filed. Even if you don't keep the returns indefinitely, you should hang onto them for at least six years after they are due or filed, whichever is later.

Backup records. Any written evidence that supports figures on your tax return, such as receipts, expense logs, bank notices and sales records, should generally be kept for at least the three-year period.

Exceptions. There are some cases when taxpayers get more than the usual three years to file an amended return. You have up to seven years to take deductions for bad debts or worthless securities, so don't toss out records that could result in refund claims for those items.

Real estate records. Keep these for as long as you own the property, plus three years after you dispose of it and report the transaction on your tax return. Throughout ownership, keep records of the purchase, as well as receipts for home improvements, relevant insurance claims, and documents relating to refinancing. These help prove your adjusted basis in the home, which is needed to figure the taxable gain at the time of sale, or to support calculations for rental property or home office deductions.

Securities. To accurately report taxable events involving stocks and bonds, you must maintain detailed records of purchases and sales. These records should include dates, quantities, prices, dividend reinvestment, and investment expenses, such as broker fees. Keep these records for as long as you own the investments, plus the statute of limitations on the relevant tax returns.

Individual Retirement Accounts (IRAs

Protecting Your Clients’ Data

Article courtesy of SBAM Approved Partner Midwest Transaction Group

Millions of customers use credit and debit cards for purchases each year. The flow of money, and information, is at an all-time high. Not only do businesses need to take precautions against fraud for themselves, it is more critical than ever to remain vigilant about protecting the banking information of their customers as well.

Here are some reminders about what should be done to protect credit card information of customers you want to do business with again and again:

Credit card information should never:
  • be acquired or disclosed without the cardholder’s consent
  • be electronically transmitted by email or any type of text messaging services
  • be electronically stored
Credit card information should always:
  • be stored in a secured area with limited access
  • be moved, when necessary, in a way so that it can be tracked
  • be shredded or incinerated when it is no longer needed
In addition, personal identification numbers (PIN) or validation codes (CVV2/CVC2/CID) should never be stored - even in a secured area with limited access AND any electronically generated credit card processing receipt should only display the last four digits of the account number. The expiration date of the card should not be displayed at all.

When conducting transactions through an internet connection, keep these security measures in mind:
  • A firewall should be in place at all times and checked regularly for activity.
  • Anti-virus software would be running at all times and regularly updated.
  • Vendor supplied system default passwords should be immediately changed.
  • Security settings should be enabled at their highest levels.
  • The connection should be periodically checked for foreign objects that could compromise cardholder information.
  • Any service provider utilized in the transaction process, like MTG, should be PCI compliant.
All of these security policies should be assigned to an individual or group to ensure that they are effectively executed and any violations or failure to execute them should be immediately reported to the appropriate individuals. It is more important than ever to protect the credit card information of your customers.

If you have any questions about MTG's credit card processing services, give them a call at (888) 599-2209 or click here for more information.

New Guidance Issued on Health Care Reform: Form W-2 Reporting and Group Health Plan Coverage

By Stephanie Hicks, courtesy of Clark Hill PLC, an SBAM Approved Partner
 
PPACA requires that employers with at least 250 employees must report the cost of employer-sponsored health care on an employee's W-2, beginning with W-2s issued for 2012 (issued in 2013). On Feb. 15, 2012, the IRS released a set of FAQs discussing the rules for reporting employer-provided group health plan coverage on and an employee's W-2, along with a useful chart that sets out the reporting requirements applicable to different types of situations and coverage.  
 
The FAQs provide that, for 2012, the W-2 reporting requirement does not apply to:
  • Employers that filed fewer than 250 W-2s for 2011
  • Multi-employer plans
  • Health reimbursement arrangements
  • Dental or vision plans that are stand-alone (or provide an election to decline coverage or accept it and pay an additional premium)
  • Self-insured plans of employers that are not subject to COBRA or other similar continuation coverage
  • Employee assistance programs, on-site medical clinics or wellness programs for which the employer does not charge a premium for COBRA or other similar continuation coverage
  • Employers furnishing Form W-2 to employees who terminated before year end and request a Form W-2 before year end
The FAQs also provide a convenient compliance chart that summarizes the reporting obligation for different coverage types and different coverage situations.
 
The FAQs can be found here.
 
The compliance chart can be found here.

To read about Auto Enrollment Waiting Periods, click here.
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